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Armenia: Energy Cooperation With Iran To Increase

Armenia and Iran have moved to cement their close political and economic ties by agreeing to plans to deepen their cooperation in the energy sector. The Armenian and Iranian energy ministers announced that the neighboring countries will expand their seasonal swap of electricity and will press ahead with the joint construction of a major hydroelectric power plant. Officials say Tehran and Yerevan are also close to starting work on a strategic pipeline that would carry Iranian and Turkmen natural gas into Armenia.

Yerevan, 12 July 2002 (RFE/RL) -- Iranian Energy Minister Habibollah Bitaraf wrapped up a three-day official visit to Armenia yesterday with upbeat statements about the future of his country's already warm relations with its sole Christian neighbor. He said the Islamic Republic is strongly interested in the success of joint energy projects with Armenia, viewing them as a key element of its policy toward the entire South Caucasus.

Speaking at a joint news conference in Yerevan, Bitaraf and his Armenian counterpart, Armen Movsisian, announced an agreement to increase the volume of mutual power supplies and reaffirmed plans to construct a multimillion-dollar power plant on the Arax River, which marks the border between the two countries. "The scope and areas of our cooperation are very broad. We are step-by-step deepening that cooperation and thus moving forward."

Movsisian agreed, saying, "Mr. Bitaraf's visit marked the beginning of very fruitful work, and I believe that this cooperation is beneficial for both the Islamic Republic of Iran and the Republic of Armenia."

The seasonal exchange of electricity between the two energy sectors was launched in 1998 and, according to official figures, has since totaled 1.3 billion kilowatt hours, or approximately $40 million. Armenia imports electricity from Iran in the winter when its hydroelectric power plants operate at a fraction of their capacity. Iran, by contrast, needs additional energy during its hot summer months and receives much of it from Armenia.

The scheme will be substantially expanded after the opening next month of a new power exchange facility in an Armenian town near the Iranian border. A new high-voltage transmission line that is currently under construction in southeastern Armenia will serve the same purpose.

In addition, Iranian and Armenian energy officials have been conducting feasibility studies on the Arax hydroelectric plant. Bitaraf and Movsisian said they have already agreed in principle to go ahead with the project, which is estimated to cost some $35 million.

Armenian President Robert Kocharian told Bitaraf on 17 July that energy cooperation should become an "engine" of Armenian-Iranian economic ties. Armenian Prime Minister Andranik Markarian likewise noted at a meeting with the Iranian minister that Yerevan and Tehran are motivated by "common regional interests" in their drive to strengthen bilateral relations.

Iran has maintained close ties with Armenia since the 1991 Soviet collapse and followed a largely neutral line on the latter's conflict with Muslim Azerbaijan over Nagorno-Karabakh. Many analysts believe that policy epitomizes the pragmatic, rather than religious or ideological, nature of the Islamic Republic's foreign policy.

Tehran and Yerevan, for example, are believed to share the common strategic interest of limiting Turkey's presence in the region. They both have strained relations with Ankara, Azerbaijan's closest ally.

The United States, which accuses Iran of being part of a global "axis of evil," recently signaled its unease over the growing Armenian-Iranian links. A senior U.S. diplomat urged the Armenian leadership last May to back America's efforts to prevent Iran from supporting international terrorism and acquiring weapons of mass destruction. The call was followed by the unexpected imposition of U.S. sanctions against an Armenian biochemical firm and businessman accused of transferring sensitive equipment to the Islamic Republic.

Armenian officials have pledged to address the U.S. concerns and claim to have already tightened export controls at the country's main border crossings. But they have stressed that the U.S. sanctions were imposed on private Armenian entities and will not affect the interstate relationship with Iran.

The deputy head of the Armenian Embassy in Tehran, Grigor Arakelian, told RFE/RL that the two states are determined to start the repeatedly delayed construction of a 140-kilometer gas pipeline in the coming months. He said Turkmenistan will soon join the $125 million project, which is opposed by the United States. "The pipeline will transport both Iranian and Turkmen gas to Armenia. We have already clarified all sources of funding [for its construction]. It remains to sign a final agreement and begin the construction work."

A tentative agreement on supplies of Turkmen gas to Armenia through Iran was reached by Kocharian and Turkmenistan's President Saparmurat Niyazov in February. According to Arakelian, the two former Soviet republics will seal the final deal "very soon." Turkmenistan is already linked to Iran with a pipeline.

Thermal power plants using natural gas mainly imported from Russia generate about 40 percent of Armenia's electricity. Armenian officials argue that the diversification of fuel sources will boost the country's "energy security."

The European Union supports the pipeline project in the hope that its implementation will speed up the closure of Armenia's Soviet-era Metsamor nuclear-power station.