Armenian-Iranian Breakthrough: What Will Come Out of This?

    • Comments - 28 October 2016, 21:07
On November 1 Karen Karapetyan sends an Armenian delegation to Iran where a gas agreement is expected to be signed with Iran. The delegation will be headed by the deputy minister of energy, the chair of Energaimpex, the recently established state-run company Haik Harutiunyan who is Karen Karapetyan’s in-law.

Energaimpex was set up during the tenure of Hovik Abrahamyan a few months ago when the Armenian ex-minister of energy Levon Yolyan visited Iran. In Iran he discussed issues relating to transit of Iranian gas to Georgia via Armenia. Afterwards, Energaimpex was created which is run by the state and which has the right to buy gas from Iran and sell it to third countries.

And now, Energaimpex may sign a deal in Iran on November 1, a few days ago the Armenian ambassador in Iran Artashes Tumanyan announced.

Interestingly, a few days prior to the possible signing of the Armenian-Iranian deal the president of Gazprom Alexey Miller arrived in Yerevan, and a few days after his visit the Armenian delegation’s upcoming visit to Iran to sign the gas deal was announced.

Apparently, Miller has confirmed Gazprom’s consent, Armenia has received Gazprom’s so-called approval.

There is an interesting situation relating to the Armenian-Iranian gas cooperation, especially considering the famous 2 December 2013 deal with Gazprom. Under this deal Armenia de facto agrees to buy Gazprom’s gas, assumes responsibility for fixed volumes of consumption.

In the same year when Armenia signed the agreement with Gazprom which was, actually, part of the package of Eurasian annexation, the Iranian ambassador in Armenia announced that Iran can supply gas to Armenia at a competitive price. The Iranian ambassador had announced that they may sell gas to one for 400 dollars, and 100 dollars to someone else, everything depends on the outcome of negotiations. Armenia responded that the ambassador’s speech was, most probably, a diplomatic mistake.

Later the Armenian minister of energy Yervan Zakharyan, as well as his successor Levon Yolyan announced that Iran has not offered cheap gas to Armenia. The question occurs which Armenia waited for that proposal instead of taking the initiative. After all, Armenia, not Iran needs to overcome its dependence in Gazprom. Hence, Armenia should be knocking at Iran’s door all the time.

However, Russia will not like this, either the case when Armenia has a real alternative to the Iranian gas or the case when Armenia has the possibility to transport the Iranian gas to Georgia and Europe. As a result, the Iran-Armenia gas pipeline commissioned in 2006 has a narrow width, not fit for transit, and practically it has been transferred to Gazprom.

Now if Armenia buys gas from Iran, it will be transported through the pipeline owned by Gazprom. And when transit of Iranian gas to Georgia is discussed, and the Iranian side has also announced about a pilot agreement, technically there is just exchange: Gazprom takes Iranian gas for Armenia and supplies the equal quantity of gas to Georgia. Iran, Georgia and Gazprom have been negotiating this for a long time.

Technically, there is no other option. Hence, Armenia is not capable of purchase and transit of gas from Iran without Gazprom’s agreement not only in terms of influence but also technical capacity. Therefore, it is clear why the Iranian visit of the Armenian delegation is announced after Miller’s visit to Armenia. Apparently, the terms and conditions have been agreed with Miller, and the Armenian side is going to sign. On the other hand, it is possible that the terms and conditions have not been agreed, which does not mean that a deal will follow immediately.

It is possible that the issue of decrease of the price of gas is part of the package, and it is possible that Yerevan is turning this to its “dividend” in the deal of transit of gas to Georgia, the so-called transit effect. It is not ruled out that Gazprom may expect a share from the newly-established Energaimpex company which is currently a 100% state-owned company.

In addition, Armenia may consider such an option but the issue of gas price is too small an issue compared with the price of the issue. Armenia can afford to discuss a share in this company only in case the issue of laying out a new pipe from Iran to Armenia to the Georgian border with a width fit for transit is brought up.