Armenia-Iran pipeline may be extended to Ukraine, EU

March 22 2004

Armenia-Iran pipeline may be extended to Ukraine, EU

Yerevan. (Interfax) – The Iran-Armenia gas pipeline, for which a
construction agreement should be signed in the near future, may be
extended through Georgia to Ukraine and on to the European Union,
Armenian Energy Minister Armen Movsisyan told Interfax.

He said that the possibility has not been ruled out of laying a
pipeline from Iran through Armenia and Georgia an onwards along the
Black Sea bed to Ukraine. “After the Blue Stream project, the
construction of long marine pipelines is no longer a fantasy,” the
minister said

He said that the supply of gas from Iran to the Ukrainian and
European markets is in line with these countries’ plans to find
access to alternative natural gas supplies.

Iran, Turkmenistan and, above all, the European Union, wants this.
Europe hopes to build a pipeline to its territory through Armenia,
with Iranian and Turkmenistani gas. But this will involve serious and
long negotiations, involving other countries that now receive Russian
gas,” Movsisyan said.

In 2000 the institute VNIPITransgaz developed a feasibility study for
the Iran-Armenia-Georgia-Ukraine-Europe gas pipeline, with an
underwater section of 550 km from the Georgian port of Supsa to the
Crimean city of Feodosia. The Ukrainian Fuel and Energy Ministry
estimated the cost of the project at $5 billion, with gas supply
volume of 60 billion cubic meters per annum, including 10 bcm for

Armenian Finance and Economics Minister Vardan Khachatryan said
earlier that construction of the Iran-Armenia gas pipeline might
begin by the end of 2003 and be completed within one to two years.

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 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.