EUROPE LOOKS TO CASPIAN TO DIVERSIFY GAS SUPPLIES
By Stefan Wagstyl in London and Isabel Gorst in Moscow
FT
July 7 2006 03:00
A southern export route for Caspian gas to Europe was first mooted
after the 1991 collapse of the Soviet Union and the emergence of three
new energy-rich states – Azerbaijan, Kazakhstan and Turkmenistan. But
the idea has been given new life by recent increases in energy prices,
and European concerns about the security of Russian gas supplies.
Jeffrey Waterous, chairman of Global Union Energy Ventures, an
investment company, says: “Whether or not Gazprom will cut off supplies
again is not the point. What’s important is that the perception of
risk that this might happen is high.”
But the European Commission and other supporters of the proposal face
formidable political, financial and technical challenges. Significant
amounts of Caspian gas are not expected to reach the EU before about
2015 – and then only if gas prices remain high. Preliminary estimates
that the Caspian region holds about 9,000bn cubic metres of gas,
are dwarfed by the figures for Russia and Iran, which together own
about 68,000bn cubic metres, nearly half the global reserves.
Oil companies argue such estimates are conservative and there could
be enough to supply 40bn-80bn cubic metres annually, or 5-10 per cent
of the EU’s forecast gas demand in 2020. A European Commission paper
puts the figure higher – at 10-15 per cent of demand.
David Woodward, the head of BP, the British oil company, in Azerbaijan,
says: “Our view is that with full assessment of Caspian resources
it’s quite possible they will provide an additional source of supply
to Europe.”
BP is completing the South Caspian Pipeline – taking gas from a
new Azeri offshore field to Georgia and Turkey. This could one day
be the first link of a route deep into Europe. But much depends on
finding enough gas to justify such a scheme and on the EU’s ability
to persuade gas producers and transit countries to back ambitious
cross-border transit schemes. Mr Woodward says the EU has lagged
behind the US in developing consistent policies for securing access
to new Caspian resources.
EU diplomats retort that this is unfair. The European Commission
has since 2002 been developing an institution called the Energy
Community which regulates energy markets, including gas, in the
EU’s future member states in south-east Europe. Turkey is considering
joining. Georgia, Armenia and Azerbaijan could be invited next year. By
2010 EU energy market rules could reach the Caspian.
The start later this year of a pipeline between Turkey and Greece
will open a first portal for Caspian gas to Europe. The Energy
Community lists seven other projects to boost capacity in existing
networks to absorb Caspian gas. The European Commission also backs
a more ambitious scheme for a whole new pipeline – the â~B¬4.4bn
($5.6bn) Nabucco project. This 3,400km route would start in eastern
Turkey and run to Austria, taking gas from the SCP and from Russian,
Iranian and North African producers.
Mr Woodward argues in- vesting piecemeal in existing networks may be
less risky than a single new pipeline.
–Boundary_(ID_1JcmPEuGTxzsdd7SzTyWQg)- –
From: Emil Lazarian | Ararat NewsPress

PAPER SEES RUSSIA’S PLAN TO BUY IRAN-ARMENIA GAS PIPELINE AS “STRATEGIC LOSS”
Aykakan Zhamanak, Yerevan
1 Jul 06
Excerpt from report by Armenian newspaper Aykakan Zhamanak on 1 July
headlined “New sign of Russia’s ill will”
At the stage of planning a gas pipeline from Iran to Armenia,
Russia had done everything possible for it to be only of local
significance. As a result, the gas pipeline was built with the diameter
of 700mm. After putting it into operation, its transit capacity will
be 1.2bn cu. m. of gas a year.
This will cover slightly more than half of Armenia’s annual demand. The
volume of the supplied gas will reach 2bn cu.m. at a later stage. But
by that time, Russia will already own the gas pipeline. There were
two reasons for Russia being against the construction of the pipeline
with a larger diameter. One reason is that such pipelines could be
both of regional and European significance. That is to say, it could
become the first section of a new gas pipeline towards Europe. But
the existence of such a gas pipeline is beneficial to Russia because
an alternative would deprive it of an opportunity to apply gas levers
to gain concessions from Europe and Armenia.
By intending to acquire the Iran-Armenia pipeline, Russia is trying
to deprive Armenia of gas. There is also a political aspect: will
the Armenian authorities be able to preserve at least this strategic
facility to ensure a better future for their country?
The future of the gas pipeline depends on Iran. The West promises the
latter greater economic benefits in case of a peaceful settlement
of the nuclear crisis. Let us assume that the crisis is settled
peacefully, Iran will benefit from that by getting the status of an
alternative gas supplier for Europe.
Naturally there are several ways in which Iranian gas could reach
Europe.
Iran would prefer the Armenian route. Of course, in terms of geography
Azerbaijan is also an option. But Iran is not going to benefit from
Azerbaijan’s acquizition of an extra source of income because it
cannot help but worry about Azerbaijan.
Naturally Armenia has no alternative in this sense. But there is one
“but”.
It is a matter of principle for Europe that the new gas pipeline
should not belong to Russia, but if it does, Armenia will stop being
seen as a transit route and Azerbaijan will become the only route. In
this sense if Russia buys the Iran-Armenia gas pipeline, it would be
a strategic loss to Armenia. The point is that Russia does not need
the pipeline, to be correct, it needs it but not to satisfy its own
needs but to hinder others.
By the way, Russia has clashed with Turkmenistan as the latter does
not want to supply cheap gas to Russia as the latter sells it more
expensively to Europe. The conflict might result in Turkmenistan
supporting the construction of a gas pipeline to Europe via the South
Caucasus. And if Russia buys our pipeline, then the gas from Iran
and Turkmenistan will enter Azerbaijan and Europe via Georgia.
[Passage omitted: reiterates the point]

BIRTH RATE DOWN IN AZERBAIJAN’S BREAKAWAY KARABAKH
Mediamax news agency
6 Jul 06
Yerevan, 6 July: A total of 983 babies were born in the Nagornyy
Karabakh republic (NKR) in the first six months of 2006, the NKR
National Statistics Service told Mediamax today.
A total of 1,019 babies were born in the NKR in the same period in
2005. The natural growth of population in the NKR in January-June
2006 was 322 people, which is 5.6 per cent less than in the same
period in 2005.

ARMENIAN PRESIDENT WINDS UP TEHRAN VISIT
Islamic Republic News Agency, Iran
July 6 2006
Armenian President Robert Kocharyan wound up his two-day visit to
Tehran and left here for Yerevan Thursday noon.
The Armenian president was officially seen off by his Iranian
counterpart, Mahmoud Ahmadinejad, at the Presidential Office Wednesday
night.
Kocharyan, heading a high-ranking politico-economic delegation,
arrived here Wednesday morning for an official visit.
His entourage includes Foreign Minister Vartan Oskanian, Minister of
Energy Armen Movsisyan and Deputy Foreign Minister Armen Kirakosian.
The Armenian president, during his stay here, held separate meetings
with President Ahmadinejad and Foreign Minister Manouchehr Mottaki.
The two sides discussed issues of mutual interest as well as regional
and international developments.
Seven letters of understanding on bilateral cooperation in the field
of energy as well as in economic and industrial infrastructures
and on legal and cultural heritages were inked by the Iranian and
Armenian officials.
Kocharyan, during his meeting with President Ahmadinejad, invited his
Iranian counterpart to visit Yerevan to inaugurate joint projects of
the two countries.
He also voiced his country’s willingness to promote bilateral ties
with Tehran in the areas of energy and transportation, particular a
rail link for the two countries.

NKR PARLIAMENT SPEAKER: LATEST PROPOSALS MADE BY OSCE MG MAY SERVE AS A BASIS FOR NK TALKS
DeFacto Agency, Armenia
July 6 2006
Latest proposals made by the OSCE Minsk group on Nagorno Karabakh may
serve as a basis for the Karabakh talks, Nagorno Karabakh Republic
/NKR/ National Assembly Chair Ashot Gulyan stated in Stepanakert today,
while commenting on the OSCE Minsk group Co-Chairs’ joint statement
on the principles of the Karabakh conflict settlement.
Speaking at a joint press conference with the NKR FM Georgy Petrosyan
devoted to the outcomes of their U. S. visit, Ashot Gulyan at the same
time noted not all provisions of the statement were acceptable for
the Nagorno Karabakh and RA leadership. In his words, the mediators
made public the proposals on the settlement’s basic principles to
initiate their discussion by the conflict parties’ societies. He
expressed opinion that the OSCE Minsk group made an opportunity for
the parties to find the issue’s settlement on their own. Ashot Gulyan
took a favorable view of the fact that “judging by the Minsk group
Co-Chairs’ proposals, the settlement will be overall”.
While speaking about the possibility of the conflict settlement current
year, Ashot Gulyan underscored that “the situation in Azerbaijan and
the Azeri leadership’s behavior testifies to the fact that Baku is
not ready for the settlement, which was mentioned in the course of
the U. S. meetings”. In his opinion, the Azeri party’s consent to a
dialogue with Nagorno Karabakh will become a signal that Azerbaijan
really strives for the conflict settlement. “I believe till the end
of the year the mediators will attempt to invigorate the settlement
process, however, one should hardly wait for Azerbaijan to alter its
stand”, the NKR Parliament Speaker noted.
Commenting on the possibility of the international peacemaking forces’
introduction to the Karabakh conflict zone, Ashot Gulyan stated,
“The talks on a peacemaking operation are premature”. Having called
the peacemaking forces a guarantor of the preservation of peace and
implementation of an agreement achieved by the parties, the Speaker
stressed armistice in the conflict zone was observed by the parties
without third forces’ participation, which is possible in the future
as well.
In his turn the NKR FM Georgy Petrosyan said, “We regard the
peacemaking forces’ possible dislocation with care”. The NKR FM
underscored the Karabakh party would wish to see the problem’s
solution, and not the elimination of the conflict’s aftermaths.
Georgy Petrosyan informed that the Karabakh party had expressed its
concern to the OSCE Minsk group U. S. Co-Chair Matthew Bryza on the
settlement principles’ publication. “Our stand is unchangeable –
Nagorno Karabakh participated in making a truce, therefore it has
got the right to take part in the negotiation process that resolves
its destiny”, the Minister underscored.

FOR JANUARY – JUNE 2006 NATURAL INCREMENT OF NKR POPULATION FELL FOR 5.6% AS COMPARED WITH THE SAME PERIOD 2005
DeFacto Agency, Armenia
July 6 2006
According to the information DE FACTO Agency received at the Nagorno
Karabakh Republic /NKR/ National Statistic Service, in the first
half-year 2006 983 babies was born in the Nagorno Karabakh versus
1019 babies for the same period 2005. Natural increment of the
population for January – June 2006 made 322 people, which is 5, 6 %
lower than the level of the same period 2005. Mechanical increment
of the population for the same time was 15 people.
In June 2006 consumer price index made 105, 9 % as compared with last
December, including that of food products (involving alcohol drinks
and tobacco) – 107, 3 %. The index of non – food goods’ prices made
104, 9 %, pay service rate – 101, 1 %.
Sharp rise in prices for fish products, potatoes, vegetables and
fruit has been registered in the Republic. In the first half-year
2006 consumer price index made 103, 4 % as compared with the same
period 2005.

7 MOUS ON ENERGY INKED BETWEEN IRAN AND ARMENIA
Persian Journal, Iran
July 6 2006
Iranian and Armenian officials signed up seven Memorandum of
Understanding (MoU) in the fields of energy, economic and industrial
infrastructures, legal and cultural heritage cooperation. The MoUs were
signed by officials in the presence of President Mahmoud Ahmadinejad
and his Armenian counterpart Robert Kocharian.
For one document, Foreign Minister Manouchehr Mottaki and his
Armenian counterpart Vartan Oskanian signed an MoU concerning Iran’s
development aids in the field of industrial and economic infrastructure
for Armenia.
In another MoU, Energy Minister Parviz Fattah and Armen Movsisyan
signed a cooperation agreement in the field of energy.
The two countries agreed in another document to cooperate in the
field of legal issues.
Iran’s Justice Minister Jamal Karimi-rad and Armenian Foreign Minister
Vartan Oskanian inked an agreement about extraditing criminals.
Dissemination of information in the field of cultural heritage was
another MoU signed up by officials from Iran’s Cultural Heritage
Organization and Armenian Ministry of Culture and Youth Affairs.
Also agreement about financing electricity power line project was
signed.
In the last MoU, the two countries agreed on the implementing program
of the third electricity power line between Iran and Armenia.
Armenia is located in the Caucasus region and borders with Georgia
in the north, Azerbaijan east, Turkey west and Iran south and it does
not have access to the open sea.
Armenia does not have any oil or gas resources, but has rich mines
of gold, copper, zinc and lead.
The country achieved its independence on September 21, 1991 from the
former Soviet Union.
Armenia’s population is about 3,300,000 according to the census
on 2002.

AZERI OFFICIAL DENIES REPORTS ON BAKU’S CONSENT TO HOLD REFERENDUM IN KARABAKH
Turan news agency
3 Jul 06
Baku, 3 July: Speculations that Azerbaijan has agreed to hold a
referendum in Nagornyy Karabakh on its status is a lie, Azerbaijani
Deputy Foreign Minister Araz Azimov has told reporters commenting on
relevant statements by Armenian officials.
He said that the Azerbaijani side had repeatedly spoken about the
possibility of holding only a nation-wide referendum on the country’s
entire territory.
That is reflected in the constitution and the country’s leadership
does not intend to revise its opinion.
As to a statement by the OSCE Minsk Group co-chairmen on the Karabakh
peace talks, Azimov said that it was “premature” to make final
assessment until the end of the talks. Probably, the co-chairmen’s
statement was aimed at “checking public opinion”. However, the
statement was not comprehensive. “Separate passages taken out of
context cannot form an objective idea on the content of the talks,”
Azimov said.
In addition, the Armenian side distorts the content of the talks and
interprets the referendum subject in a manner advantageous to them.
Azerbaijan’s position is clear: political issues can be settled
only when military consequences of the conflict are eliminated. “The
Azerbaijani population should return to Nagornyy Karabakh. For this
purpose, a peaceful atmosphere should be created and the occupied
territories should be liberated. The Armenian side has accepted this
logic,” Azimov said.
He denied Armenian reports about a special status of [occupied]
Lacin and Kalbacar districts. Both sides are interested in the secure
functioning of the Lacin corridor via which Azerbaijan has transport
communication with [Azerbaijani exclave of] Naxcivan and Armenia with
Nagornyy Karabakh.
As to Kalbacar, the issue of [ensuring] security of Nagornyy Karabakh
can be solved through the deployment of international observers
or peacekeepers.
Therefore, Armenians’ attempts to preserve control over Lacin and
Kalbacar are groundless.
Azimov also spoke about the impossibility of one-sided demilitarization
of the region. Commenting on the course of the talks, he said that
the effectiveness of the talks depended on political will of “the
opposite” side.

RUSSIAN-AZERI RELATIONS ARE QUITE OK – AZERI PM
Author: S.Agayeva
TREND Information, Azerbaijan
July 6 2006
Russian-Azeri relations are quite OK, Trend reports quoting Artur
Rasizadeh, Azeri Prime Minister, receiving Valentin Buravlev, deputy
Governor of Chelyabinsk Region, the Russian Federation, in Baku.
Azeri Prime Minister said Azeri-Russian relations are successfully
progressing both at federal and regional level. Rasizadeh informed
the guest of Azeri-Armenian conflict , refugees sate and Baku’s
peaceful efforts.
In turn, Buravlev informed Prime Minister of meetings held with heads
of various governmental authorities of Azerbaijan and documents
signed. He stated his confidence in the further development of
relations between Azerbaijan and Chelyabinsk Region.

MATTHEW BRYZA: FURTHER STEPS OF THE PEACE PROCESS DEPEND ON THE PRESIDENTS
ArmRadio.am
07.07.2006 14:30
US Co-Chair of the OSCE Minsk Group Matthew Bryza declare that the
Presidents of Armenia and Azerbaijan have political will, “but we do
not know whether it will suffice to take the last complex decisions
and agree upon the basic principles of peaceful settlement.”
Matthew Bryza noted that the further steps of the peace process
depend on the President, “since heads of states are responsible for
the prosperity, peace and democracy in their countries.”
“Minsk Group Co-Chairs consider that the Presidents of Armenia and
Azerbaijan should prepare their peoples and primarily the political
societies to think about serious mutual concessions, which both
countries should make if they want to reach an agreement,” Matthew
Bryza said.
“By saying political society I do not mean only the non-governmental
organizations. I’m speaking about the whole population, since
everyone watches TV, read newspapers and listen to radio, and they
should better understand how the discussions are proceeding. I hope
that understanding this, they will support the complex decisions and
mutual concessions the Presidents will have to make,” Matthew Bryza
said in an interview to BBC Russian service.