Interfax
April 1 2004

Armenia, Iran to sign gas pipeline deal in late April

Yerevan. (Interfax) – Armenia and Iran will sign a final contract in
Yerevan in late April on the construction of a gas pipeline linking
the two countries, Armenian Energy Minister Armen Movsisian told
journalists.

Iran’s Oil Minister Bijan Namdar Zanganeh will arrive in Armenia to
sign the document.

Movsisian said that the new intergovernmental contract will “bring
bilateral documents signed in 1992-1995 into line with modern
requirements.”

The minister said that the two nations’ talks had also produced an
agreement on the volume of gas supplies and the main parameters of
the gas pipeline.
“The gas pipeline is intended to meet Armenia’s domestic needs,” he
said.

The pipeline’s construction will begin next year and be finished 20
months later. The cost of construction in Armenia is estimated at
about $100 million. The pipeline’s construction in Iran will cost a
little more.

Movsisian described the price for Iranian gas set in the contract as
“more than reasonable.”

The project will involve building new sections into the two
countries’ existing pipelines and reconstructing a number of segments
of Armenia’s gas transportation network.

The minister said that the planned pipeline will allow Armenia to
receive gas both from Iran and Turkmenistan, adding that “at this
stage, we do not see any differences on this issue. Only after the
gas pipeline is built, the economy itself will show whose gas is more
preferable.” Russian Deputy Prime Minister Boris Alyoshin said at the
start of February that the construction of a gas pipeline from Iran
to Armenia is in Russia’s interest. He said that Gazprom may become
the operator of part of the pipeline through Armenia in the future.
He said that Russia is consulting with Armenia on a feasibility study
for the pipeline.

The Iran-Armenia gas pipeline has been on the drawing board since
1992. In addition to the two main participants in the project, other
interested parties include Russia, Turkmenistan, Ukraine, European
Union countries, and China. The European Bank for Reconstruction and
Development has said that it is ready to finance the project.

Armenia and Iran signed an intergovernmental agreement in 1995
establishing the route of the pipeline, which stretches 114 km,
including 41 km in Armenia and 100 km in Iran. The agreement also
sets the price for gas to be transported through the pipeline at $84
per 1,000 cubic meters. The cost of the project is estimated at $120
million.

The possibility of building a pipeline to the Armenian-Georgian
border is also being considered. In this case, the cost of the
project will increase to $306 million and the pipeline will be 550 km
long and have a capacity of 4.5 billion cubic meters per annum.