THE IRAN-ARMENIA PIPELINE: FINALLY COMING TO LIFE
By Hooman Peimani

CENTRAL ASIA – CAUCASUS ANALYST
Wednesday / September 22, 2004

After about three years of its signing in 2001, the Iranian and
Armenian governments have finally initiated the process to implement
a 142-km gas pipeline agreement. Accordingly, Armenia will receive
1,500,000 cubic meters of gas from Iran per day once the pipeline goes
on stream. Two Russian energy companies (ArmeRuss Gazprom and Gazprom)
have started a feasibility study on the project for which a group of
their engineers visited in August the Armenian region through which
the pipeline will pass. As stated in July by Armenian President Robert
Kocharian, the project is of great importance to Yerevan.

BACKGROUND: Being surrounded from three sides by hostile or
unreliable neighbors, the operational pipeline will meet Armenia’s
gas requirements from a friendly neighboring supplier, while
significantly increasing Iran’s gas exports now mainly limited to its
uncertain exports to Turkey. The pipeline, which could be extended
to Georgia and Ukraine, could go even farther to reach Central and
Western Europe via Ukraine. If fully implemented, this will not only
increase Iran’s gas exports substantially, but it will drastically
boost the importance of Armenia and Georgia and, by default, the
South Caucasus, as a main export route for fossil energy to supply
the European economies. Armenian-Iranian relations have been on the
expansion track since Armenia’s independence in 1991 for various
reasons. Against a background of historical ties and the existence
of Iranians of Armenian origins who have kept a degree of contact
over centuries between the two nations even during the Soviet era,
political realities, economic imperatives and security considerations
have inclined Yerevan and Tehran to seek close relations. Being a
landlocked country, Armenia’s surrounding by two hostile countries
(Azerbaijan and Turkey) to its east and west and an unreliable
neighbour (Georgia) to the north makes its southern neighbour (Iran)
the only reliable outlet for accessing the open seas and regional and
international markets, added to its need for importing fossil energy
from a secure supplier. Concerned about the resumption of war with
Azerbaijan over the disputed Azerbaijani territory of Nagorno Karabakh
with a possibility of dragging Turkey into the conflict, Armenia also
needs Iran’s close and friendly relations as a regional power to deter
such scenario. As for Iran, close and cordial relations with the three
Caucasian states have been important as, besides economic interests in
the Caucasus, the region provides a land link between Iran and Europe,
a necessity for the Iranians to reduce their heavy reliance on Turkey
for that matter. Preventing the region’s domination by hostile America
has also been another incentive for Tehran to forge friendly ties with
the regional countries. Given the extensive and growing relations,
including military ones, between Washington and Baku and Tbilisi,
close ties with Yerevan, which has sought strong relations with both
Tehran and Moscow while having friendly relations with Washington,
is of special importance for the Iranian government.

IMPLICATIONS: Against this background, the interest of both Armenia and
Iran for constructing a gas pipeline is quite understandable. Lacking
any significant fossil energy resources, Iran is the most logical
long-term supplier of gas and oil for Armenia whose exports to that
country does not require the consent of Armenia’s other neighbours. The
possibility of the pipeline’s continuation to Georgia and Ukraine –
both of which have already expressed an interest in the scenario
– creates an additional motivation for the Armenians who could
economically benefit of such scenario by providing a major, and
potentially the major, route for Iran’s gas exports, while creating
stakes for Georgia in maintaining good ties with their southern
neighbour. Moreover, its potential to become a pipeline to supply
the European Union (EU) with Iranian gas makes its construction even
more interesting for the Armenians. The EU has been keen on importing
gas from Iran as a means to secure adequate number of suppliers for
its increasing gas requirements, to diversify its gas suppliers and
thus to reduce its heavy reliance on Russia and certain North African
countries for its gas imports. Brussels has given serious thoughts,
including a feasibility studies undertaken over a year ago, about
connecting the existing Iranian-Turkish gas pipeline to Europe via
Greece and/or Bulgaria. Various factors, including Ankara’s twice
closure of the pipeline since its inauguration in 1993 because of
its disputes with Tehran over the amount and pricing its gas imports,
and Brussels’ political considerations, have prevented the project’s
realization. In the absence of those considerations and provided the
prevalence of durable peace in the Caucasus, the Caucasian export
route could have a better chance to become a reality if the current
Turkish-Iranian disagreements on gas exports continue.

CONCLUSIONS: The recent enthusiasm of Yerevan and Tehran for
constructing the gas pipeline and the involvement of two Russian gas
companies in the initial phase of its implementation are good signs as
they create hope for its actual construction. However, in the absence
of a firm construction schedule, it is still a little too early to
consider the recent developments as a clear sign for the project’s
implementation. There is no question that both the Armenians and the
Iranians are determined to make this happen, while having the blessing
of the Russians as reflected in the mentioned involvement of their gas
companies. Russia’s potentially troublesome ties with Georgia make it
an unlikely long-term supplier of gas and oil to Armenia as it can only
access the latter via Georgia, given the hostile state of relations
between Azerbaijan and Armenia whose future is anyone’s guess. This
explains Moscow’s backing of the project. Nevertheless, the recent
positive developments are still inadequate factors for the project’s
rapid implementation as demonstrated in the shelving or long delays
in the implementation of many energy projects in the Caspian region
such as those involving Iran and its neighbours. Developments in the
next few months, including clear announcements on the availability of
funds and a construction schedule, will certainly reveal whether the
Caucasus will become a potential major route for Iran’s energy exports
or the Iranian-Armenian gas pipeline will turn into a pipe dream.

AUTHOR’S BIO: Dr Hooman Peimani works as a Senior Research Fellow
for the Centre for International Cooperation and Security (CICS),
University of Bradford, UK.

From: Emil Lazarian | Ararat NewsPress