Armenia Considers Increase in Iranian Gas Supply

YEREVAN (RFE/RL)—Armenia will start negotiations with Iran soon on the possibility of dramatically increasing imports of Iranian natural gas that are currently dwarfed by supplies from Russia, Energy and Natural Resources Minister Armen Movsisian revealed on Wednesday.

Movsisian told RFE/RL’s Armenian service (Azatutyun.am) that the Armenian government is ready to purchase up to 2 billion cubic meters of Iranian gas each year.

The figure matches annual demand in gas of Armenian households, thermal power plants and other corporate consumers. It is being fully met by Russia’s Gazprom monopoly.

Armenia has also imported around 500 million cubic meters of Iranian gas per annum until now. It has been used for generating electricity exported to the Islamic Republic.

Movsisian gave no details of the planned gas talks with the Iranians as he briefly spoke to RFE/RL’s Armenian service. His announcement came just days after Iran’s ambassador in Yerevan, Mohammad Reisi, said Tehran is ready to boost gas supplies to Armenia and offer more beneficial terms for that purpose. He said the issue may be on the agenda of the next session of an Armenian-Iranian intergovernmental commission on economic cooperation due in May.

Movsisian’s remarks were construed by Aram Marjanian, a Yerevan-based energy expert, as an indication that the Armenian leadership would now like to diversify supplies. “Iranian gas has always been an interesting alternative to Armenia’s energy sector and other gas consumers,” said Marjanian.

The minister’s revelation comes as a surprise given the fact that the Armenian government completed a highly controversial deal with Gazprom as recently as in January. The government ceded its remaining 20 percent stake in Armenia’s gas distribution network to Gazprom and granted it 30-year exclusive rights in the domestic energy market. In return, the Russian energy conglomerate wrote off a $300 million debt incurred by the government as a consequence of secretly subsidizing the Russian gas price for Armenia from 2011-2013.

Gazprom also mostly reversed a 50 percent surge in the tariff announced in April 2013, setting it at almost $190 million per thousand cubic meters, or well below international market levels. The discount was officially attributed to President Serzh Sarkisian’s unexpected decision to make Armenia part of the Russian-led Customs Union.

Critics of the deal, among them Armenia’s main opposition parties, say that the Sarkisian administration should have increased Iranian gas imports instead of deepening Armenia’s dependence on Russia for energy resources. Government officials and Movsisian in particular have insisted that Armenia buys the bulk of its natural gas from Russia because it is much cheaper than Iranian gas.

Reisi publicly questioned Movsisian’s claims late last year, implying that the Islamic Republic is ready to sell gas to its sole Christian neighbor at an even lower price. The Iranian ambassador also claimed that Yerevan has never sought to officially negotiate with Tehran over more large-scale gas supplies.