Armenia to sell Iran gas pipeline to Gazprom

Armenia will sell its section of an Iranian gas export pipeline to Russia’s Gazprom, Deputy Energy Minister Ara Simonian has said.

The takeover of the 41-kilometer-long pipeline, however, will not allow Gazprom to “mess with” gas imports from neighboring Iran, Simonian said.

The decision leaves Moscow in full control of natural gas supply routes to Armenia. Gazprom delivers 2 billion cubic meters of gas a year to the ex-Soviet state and has a monopoly on supply and distribution in the country.

Iran’s 450 million cubic meters per year of gas exports to Armenia in exchange for electricity are just a quarter of Gazprom’s supplies.

For payment, Armenia provides Iran with three kilowatt-hours (kWh) of electricity for every cubic meter of gas it receives.

In March, Energy Minister Armen Movsisian said Armenia planned to increase its imports of gas from Iran to 2 billion cubic meters per year, an increase of nearly 75 percent.

Gazprom, which controls Armenia’s entire gas pipeline system and furnishes most of the country’s gas, has not reacted to the announcement.

In 2007, the state-controlled Russian energy company forced Armenia to limit the diameter of the 140-kilometer-long gas pipeline from Iran to forestall the possibility of re-exports to Europe.

According to Iranian Ambassador to Yerevan Mohammad Raeesi, the price of gas offered by Iran to Armenia where one-third of the population of roughly 3 million people live in poverty is “incomparably low”.

Iran sits on the world's second largest proven gas reserves after Russia, estimated above 41 trillion cubic meters.

The country exports 10 billion cubic meters of gas per year -- 90% of which goes to Turkey under a 25-year agreement, with the rest swapped with Azerbaijan and Armenia for gas and electricity.

Iran currently produces about 166 billion cubic meters of gas per year, which is mostly used at home. To put it in perspective, Russia exports about 150 billion cubic meters of gas a year.

The country has also an agreement to export 35 million cubic meters per day of gas to Iraq which officials say is about to start.

Managing Director of the National Iranian Gas Company Hamid Reza Araqi has said the exports would begin this month.

There are further plans in the works to export Iranian natural gas to Oman and Kuwait.

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