Iran-Armenia pipeline construction may begin by year-end

March 16 2004

Iran-Armenia pipeline construction may begin by year-end

Yerevan. (Interfax) – Construction of the Iran-Armenia gas pipeline
may begin by the end of 2003 and be completed within one to two
years, Armenian Finance and Economics Minister Vardan Khachatryan
told journalists on Monday.

He said that the gas pipeline will become one of the main alternative
sources of fuel for Armenia after the closure of Armenia Nuclear
Power Plant.

The minister said that to replace the capacity of the nuclear plant
it is necessary to find about $1 billion. He said that at the moment
only the European Union has said that it is ready to pay out 100
million euros for this. This will be paid into a special fund.

The said that the EU’s decision will act as a stimulus to foreign
investors. The minister did not rule out Russian participation in the
construction of the pipeline.

In turn Torben Holtze, the head of European Union’s delegation in
Armenia and Georgia, told journalists after talks with Khachatryan
that it will only be possible to pay out 100 million euros to Armenia
to create alternative energy supply sources after the government sets
a date for the closure of Armenia Nuclear Power Plant, on which the
EU is insisting.

Holtze also did not rule out the possibility of Iranian gas being
supplied to Europe through this pipeline but said that this project
is still in the future and is not yet being discussed. He also said
that the EU and Russia have different economic interests.

Iranian Ambassador to Armenia Mohammad Farhad Koleini said earlier
that in the near future the Iranian oil and gas minister will visit
Armenia, during which a final agreement will be signed on the start
of the pipeline.

Russian Deputy Prime Minister Boris Alyoshin said at the start of
February that the construction of a gas pipeline from Iran to Armenia
is in Russia’s interest. He said that Gazprom may become operator of
part of the pipeline through Armenia in the future. He said that
Russia is consulting with Armenia on a feasibility study for the

The Iran-Armenia gas pipeline has been on the drawing board since
1992. In addition to the two main participants in the project, other
interested parties include Russia, Turkmenistan, Ukraine, countries
in the European Union, and China. The European Bank for
Reconstruction and Development has said that it is ready to finance
the project.

Armenia and Iran signed an intergovernmental agreement in 1995
establishing the route of the pipeline, which stretches 114 km,
including 41 km in Armenia and 100 km in Iran. The agreement also
sets the price for gas to be transported through the pipeline at $84
per 1,000. The cost of the project is estimated at $120 million.

The possibility is also being considered of building a pipeline to
the Armenian-Georgian border. In this case the cost of the project
will increase to $306 million and the pipeline will be 550 km long
and have a capacity of 4.5 billion cubic meters per annum.