Armenia and Iran ink gas, gas pipeline agreement

Interfax
May 20 2004

Yerevan. (Interfax) – Armenia and Iran signed an agreement on May
13 on Iran providing Armenia with at least 1.1 billion cubic meters
(bcm) of natural gas annually, and the two countries working to build
a pipeline to be launched before January 1, 2007.

Armenian Energy Minster Armen Movsisyan told the press afterwards
that Armenia will pay for the Iranian gas with electricity.

The tentative price tag on building the 41-km Armenian section of
gas pipeline from Megri (near the border with Iran) to Kajaran will
be $96- $100 million. Kajaran-Yerevan pipeline was built earlier and
is ready for use.

The cost of the roughly 100-km Iranian section is expected to be
$120 million. Both parties will build their sections independently,
Movsisyan said.

He declined to identify financial sources for the Armenian section or
how much the Iranian gas will cost, citing commercial confidentiality.

Iranian Oil and Gas Minister Bijan Zanganeh was present for the
signing, and he also declined to specify prices. He noted that the
deal is for 20 years, during which Iran is to supply its neighbor
with up to 36 bcm in exchange for electricity produced in Armenia.

In 1995, the two countries signed an inter-governmental agreement
laying out a route for a gas pipeline running 141 km overall, as well
a gas price of $84 per 1,000 cubic meters. The project is estimated
at $120 million, with the Armenian section costing $90-$100 million
because of difficulties building pipeline through mountainous terrain.

The idea is that Armenia will initially be receiving 700 million cubic
meters of gas a year through the new pipeline, that increasing later
to 1.5 bcm annually.

Armenia and Iran have discussed building this pipeline since 1992.
Russia, Turkmenistan, Ukraine, European countries and China have all
expressed interest.