ARMENIAN-IRANIAN RELATIONS AND ENERGETIC AND TRANSPORT PROGRAMMES OF IRAN
Sevak Sarukhanyan
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23 March 2009
Armenian-Iranian relations entered into an active development
stage in recent years and this is conditioned by the fact that the
implementation of economic programmes began to play an important
role in the interstate cooperation. Armenia-Iran gas pipeline, which
construction has already been over, is only a pert of the economic
cooperation. The oil refinery, built on the territory of Armenia,
the construction of Armenia-Iran railway can give a fresh impulse to
interstate relations. At the same time, the implementation of these
programmes cannot only be a part of exclusively Armenian-Iranian
relations. Their implementation is directly connected with the
regional, and in some aspects with the global strategy of Iran,
which has definite political and economic components. The article
touches upon the issues relating to energetic and transport spheres
of that strategy, the significance of those issues for the Republic
of Armenia is examined.
Energetic policy Iran-Armenia gas pipeline
The energetic policy of contemporary Iran is based on two basic
principles:
to modernize the energetic system that belongs to the state, to take
steps to achieve a high level of oil and gas supply and refinement,
to use its vast oil and gas resources to strengthen its political
and eco nomic positions from political and economic points of view.
If we observe the cooperation of Iran with other countries and foreign
companies, which is constituent part of Iranian energetic policy, then
we can say that the cooperation develops positively in conditions,
when it meets two aforementioned principles. Here we can point out
the entry of French and Turkish companies to "South Pars" gas field,
the special conditions created in Iran for the National oil company
of China, the fact that in recent years Iran has become one of the
main exporters of electric power to Iraq, and this is at a time when
the Islamic republic has problems with the generation and import of
electric power.
At present the most important problem for Iran is the creation of
export capabilities for the vast gas resources1. To solve this problem
the works are carried out in two directions:
the provision of international investments for the "South pars" gas
field development and, at the same time, maintenance of the state
property on that field.
the provision of Iranian gas supply to the international market
of energy carriers by preserving the direct connection between the
sellers and the buyers and the minimal influence of the transition
country in the gas import2.
The second direction, of course, should be regarded as most important
relating to Armenia as it is directly connected with the functioning
of Armenia-Iran pipeline .. After the signing of the contract on
gas pipeline construction there were many speculations in Armenian
saying that Iran wants to use Armenian territory and Armenia-Iran
gas pipeline to export gas to Georgia and the EU.
When it became clear that the capability of the pipeline was not
enough to implement that objective, the rumours were spread that the
pipeline of small capability was being constructed due to the pressure
of Russian party, which wanted to intervene the entrance of Iranian
gas to European market.
It is obvious that the period of 2003-2004 was the most active from the
point of view of the negotiations between Iran and the EU devoted to
the energetic issues. But as a result, there was no word about Armenia
or South Caucasus as a transition territory for the export of Iranian
gas, at least in the part, which was presented to the community through
press-conferences and press releases. The only concrete proposal on the
extension or the increase of capability of the Armenia-Iran pipeline
was made in 2005, when the minister of energetic of Iran stated that
Tehran proposed Yerevan, Tbilisi, Moscow and Kiev to create a joint
interagency commission to discuss and make preliminary decisions on
the issues of gas pipeline construction from Iran to Ukraine. The
commission has not been created till now and there have been no
discussions on the extension or the increase of capability of the
pipeline. If we take20into consideration the ongoing isolation of Iran,
the fact that Georgia obtains enough gas from Baku-Tbilisi-Erzurum
gas pipeline to provide its energy security, then today we cannot
speak about the extension of Armenia-Iran gas pipeline.
At the same time, in recent months the developments in the relations
between Iran and Turkey have evidenced that probably the territory
of Turkey and mainly "Nabucco" gas pipeline will be used by Iran to
supply gas to the EU. It is obvious that in recent period Turkey tries
to underline the role of Iran in Europe’s energy security ensuring. On
January 13 during his report in European policy centre in Brussels the
Turkish prime-minister R. Erdogan stated that "Nabucco" could make
sense only if gas was pumped to Europe not only from Kazakhstan,
Turkmenistan and Azerbaijan, but also from Iran. The talks on
Turkish-Iranian energy collaboration began at the beginning of the
year and this was caused by the visit of Ali Larijani, the spokesman of
Iranian parliament, to Ankara. As a result, the ministers of energetic
of Turkey and Iran were given a commission to stir up the negotiations
on the intensification of collaboration and implementation of joint
programmes in the sphere of gas. The pipeline Erzurum-Tabriz, built
as back as 2001, creates rather good background for the accession of
Iran to "Nabucco" project.
This pipeline supplied Turkey on average=2 0with 8 billion cubic
meters of gas annually; meanwhile, the capability of that pipeline
allows supplying three times as much gas.
After the developments which took place in South Caucasus in August,
when it became clear that Georgia was not reliable as a transit
country, the possibility that Turkmenistan and Kazakhstan will join
the South Caucasian pipeline (Baku-Tbilisi-Erzurum) has sharply
lowered. Today Azerbaijan, in fact, is the only Caspian country
ready to take part in "Nabucco" project not only on paper but also
practically. . Neither Turkmenistan, nor Kazakhstan has made any
practical step to become a part of that project and they would hardly
do in the near future. Under such conditions Ankara realizes that in
order to implement the "Nabucco" project and to get necessary financial
and political dividends they need to include Iran, which has rather
vast gas resources, in that project. There is such an approach in
Europe too, on the level of political and economic actors. At the
summit in Budapest the necessity of developing of cooperation with
Iran was also stated by the executives of the companies, which were
involved in the implementation of "Nabucco" pipeline, including the
author of the project and one of the main lobbyists the vice-president
of Austrian "OMV Gas & Power GmbH" company G. Bogart.
Let us mention one important fact: in January 2009 on the official
site of "Nabucco" project a new map of the
project was placed. It shows that one brunch of the pipeline enters
the territory of Iran (look at the map).
The main difficulties, which may emerge owing to the accession of
Iran to the "Nabucco", are conditioned by the position of Washington
as the new administration of the US, in spite of the different
analysis, has not elaborated and presented its own "Iranian policy"
yet. However, today there are rather good grounds for the improvement
of the relations between Iran and America, especially, if we take
into consideration those difficulties, which will arise after the
withdrawal of their military base from "Manas" in Kirgizstan. This
will bring to the shift of the power and will directly influence the
relations between Iran and the US.
Besides the above mentioned developments, it is also worth mentioning
that Iran has no alternative for the territory of Turkey in the
issue of gas export to Europe. Being the shortest way (from the point
of view of geography) for Iranian gas supply to Europe, Turkey, on
its political geography, is also the most appropriate way, because
it provides the gas transition to Europe through the territory of
only one country, in difference from the way, which comes through
South Caucasus.
However this does not mean that there is no way or need to increase
the=2 0 capability of Armenia-Iran pipeline. The decision of the
authorities of Armenia to build a new nuclear power plant with
1000-1500 MW power shows that Armenia is on its way to become an
important electric power producing centre. This policy may succeed
only if the political dialogue between Armenia and Turkey causes
the developments in the economic and, mainly, in energetic spheres
in interstate relations. It first of all refers to the export of
electric power to Turkey, which eastern districts have rather great
demand of electric power.
The possibility of the increase of the export capabilities of electric
power to Iran is also high, but Iranian market in the long term cannot
be regarded as priority, because the rapprochement between Iran and
the West will cause the investments flow to the energy sector of Iran,
the development of nuclear programme, the building of new thermal
power plants and sooner or later will turn energy resources rich Iran
into a self-sufficient, from the point of view of electric power state.
In fact, today, the issue of the increase of the capability of
Iran-Armenia is directly connected with the normalization of the
relations between Armenia and Turkey.
Oil refinery and oil pipeline
As for the oil sector of Iran and Armenian-Iranian collaboration in
oil sphere, then there are many problems. Most of them, which relate
to Iran, are connected with the following problems:
40 of 60=2 0working oil-wells in Iran are rather worn out, which will
cause the reduction of oil production in near future, 4 big and 18
small oil refineries cannot supply the demand of refined oil products
in Iran. The result is that almost 40% of oil products consumed in
Iran comes from abroad and Iran with the help of subsidy assistance
keep low prices on oil products and first of all on petrol.
Though the problems mentioned in the second point make difficulties
just for Iran, at the same time, they are rather important factor in
the context of the development of the energetic cooperation between
Armenia and Iran. Here, first of all, we mean the prospects of building
oil refinery in Armenia and the first statement concerning it was made
at the beginning of 2007 by presidents of Armenia and Russia. For
Iran the economic expediency of oil refinery building in the south
of Armenia is connected with general problem of oil refining in
the Islamic republic. The main oil refining capabilities were built
in Iran 35-50 years ago and were to supply the refined oil demand
in Iran. It is evident that for recent decades Iranian refineries
have undergone obsolescence and deprecation. Under the condition
when there are no direct western investments it is rather difficult
to build new refineries on the territory of Iran. Iranians have no
contemporary refining technologies and capacities, and the demand
of refined oil in Iran is growing, whic h is determined not only
by economic development of the country but also by the fact that the
population of Iran has doubled as compared to 40 or 50 years ago. Today
Iran is a state, which exports crude oil and imports refined oil and
petrol. Iranian government intends to struggle with such a situation
in near future. But this situation is objective and it is determined
by the absence of refining capabilities and new technologies. It is
almost impossible to create those capabilities themselves and there
are no foreign investments in that sphere because:
there are no attractive economic conditions in the country for foreign
investors and on the international arena there is an opposition to
American political investments to Iranian oil refining and oil sector
in general.
China (which has enough means to set the network of oil refineries
in Iran) is the only country, which is out of American control and
has no direct dependence on the US, and it is interested in getting
crude oil from Iran, which amount may reduce if the Islamic republic
develop the oil refining sector.
In this context the building of oil refinery on the territory of
Armenia (and this may be joint Russia-Iranian project) seems rather
profitable for Iran. Though the oil refinery will be out of Iranian
territory its geographic position and the joint Russian-Iranian nature
of the investments will reduce the possible economic and political
losses for Iran. The building of Armenia-Iran railway will connect
Iranian railway with Armenian railway, and this will prove the Islamic
republic even more secure and profitable access to Black Sea ports
of Georgia (if Meghri connects with one railway to a common Armenian
railway network, round Nakhichevan).
At the end of 2008 the minister of transport of Russia and the
co-chairman of Armenian-Russian intergovernmental commission I. Levitin
made the statement that the construction of an oil refinery in Armenia
is unprofitable, and this statement complicates its building. But it is
still on the agenda, as the statement by Livitin only evidences that
the Russian companies would hardly be involved in the construction
of the refinery. Of course, one could hardly regard the construction
of the oil refinery as super profitable, moreover if we take into
account that Armenia is in blockade, the oil products market in Iran
is under the state control and that is why it is not so attractive
for business. But the situation may change and there are two important
reasons for such a change:
The normalization of the relations between Armenia and Turkey and
the re-opening of the borders may create a new market for the Iranian
oil refined in Armenia.
Azerbaijani authorities last year took the decision to close two
oil refineries in Baku; Georgian authorities also speak about the
possibility of such a decision. It is not excluded that in a co uple
of years there will be no oil refinery in South Caucuses, which may
cause a new rather attractive situation for oil products production
and the building of a new refinery.
The building of the oil refinery is important for Armenia not only
because it will strengthen the energetic security of Armenia but also
because Iran-Armenia oil pipeline and railway will be constructed. The
statement made by the minister of energetic and natural resources of
Armenia A.Movsisyan on December 22, 2008 that there was an agreement
about the construction of pipeline for the import of refined oil
products from Iran to Armenia might create a good bases for the oil
refinery building3.
At the same time, the discussions of oil refinery building, in our
opinion, have already had their most important result: the issue of
Armenia-Iran railway has become a concrete discussion theme and this
is, perhaps, even more important than the programmes implemented in
the energetic sector.
Transport sector Today Iran is one of the world leading countries in
the issue of the railway construction. For several recent years due
to the implemented big construction projects Iran has created a big
railway mainline system, which connects in one railway network the
railways of Turkey, Iran and Turkmenistan. The map of the railway
mainline system of Iran is presented below4.
But today Iran is directly involved in the implementation of several
regi onal projects, which may even increase the role of Iran as a
transition and transport area. Those projects are:
On March 25, 2008 in Dushanbe the ministers of foreign affairs of Iran,
Tajikistan and Afghanistan signed a memorandum about the construction
of railway, which supposedly would start from Iranian Mashad and
would still finish in Tajikistan capital Dushanbe. According to the
minister of foreign affairs of Tajikistan Kh. Jarikh, in the future
the railway will continue towards Kyrgyzstan and China. At the same
time a modern trunk road will be built from China to Iran, mainly to
the city of Bander-Abbas on the Gulf coast.
In November 2009 the mejlis of Kazakhstan initiated the hearings
on the search of the sources of finance for the construction of
the railway from Kazakh city of Uren to Iran5 (the city of Gorgan,
which is situated not far from Caspian Sea) through the territory
of Turkmenistan. The new railway will be 600km shorter than the one
operating today, which goes through the territories of Uzbekistan and
Turkmenistan and connects to Iranian city of Saraskh. This will boost
the growth of cargo transportation. This project is, at some extent,
a competitor of Dazvin-Resht-Astara railway and can transport the
cargo from north to the south of Central Asia. And the flow traffic
is growing. According to the president of "Russian railways" company
V. Yakunin, in 2015 the railway flow traffic from=2 0the north to
the south will grow on 53% as compared to 2007, even when there is no
railway in the direction Russia-Azerbaijan-Iran. However, it is not
clear what growth can be shown if Kazakhstan, Turkmenistan and Iran
will build a new, shorter and profitable railway. The discussions
on the construction of a railway played a central role during the
official visit of the president of Turkmenistan G. Berdimuhamedov to
Iran (February 13-15). It is remarkable that a day before the visit
of Turkmen president to Iran V.
Yakunin had also been there and the main aim of his visit was to start
the negotiations on the construction of Dazvin-Resht-Astara railway,
which would connect Russia, Azerbaijan and Iran.
Since 2004 the issue of the construction of Dazvin-Resht-Astara has
been discussed. The Russian-Azerbaijani-Iranian consortium, founded
in March 2008, had to begin the construction works, but Iranian and
Azerbaijani parties have done almost nothing in this line.
The first two points should be regarded as very important for
Armenia. If those projects are implemented, then Armenia may have a
short railway to Central Asia and China. For that end it is important
that Armenia-Iran railway is built and this, in its turn, will create
a direct railway connection between China and Black Sea ports. It is
not excluded that in the issue of finding the sources of finance for
the construction of Armenia-Iran railway this factor will play a k ey
role. First of all we mean China. During the visit of the chairman of
the National Assembly of the RA Hovik Abrahamyan in December 2008 to
China the issue of the railway construction was also discussed, and
it, according to the official information, interested Chinese party.
Of course, the global economic crisis will influence all the
aforementioned projects, but it cannot stop them, as there are very
important preconditions for their implementation. All these projects
give Armenia the opportunity to take some steps to overcome the
blockade and integrate into the regional and global economy.
1Iran possesses 16% of world gas resources and the possible export
volume, according to different sources, may be 80-120 billion cubic
meters.
2This stance of Iran determined the present low level of the
cooperation between Turkey and Iran, as Turkey tries to become not
only a transition country, but also a reseller of Iranian gas.
3The diameter of the pipeline will be 250mm, the length – 300km. The
project will cost $200-240 million.
4Map copyright belongs to "Noravank" foundation.
5Kazakhstan and China, in their turn, reconstruct the railway, which
connects those two countries. In order to increase the flow traffic on
Dostik (China)-Alashankou (Kazakhstan) section, the interstate managing
and developing council was created. In fact if new Kazakhstan-Iran
railway is built it will also connect China and Iran, crea te a
possibility to import and export goods from China (and to China),
using for this purpose Iranian port Bander-Abbas on the Gulf coast.
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