Aravot, Armenia
Jan 30 2007

Russia’s plans to build oil refinery in Armenia

by Naira Mamikonyan

"The hazy project"

Pessimism about the Russian project on the construction of an Iranian
oil refinery in Armenia does not prevent Yerevan and Moscow from
speaking about this. After Russian President Vladimir Putin’s
statement during his meeting with his Armenian counterpart in Sochi
that in March 2007 Russia will move from the "shameful third place"
to the first one by its volume of investment, the Armenian
authorities officially announced the new Armenian-Russian economic
initiative. Thus, yesterday the press secretary of the Armenian
president, Viktor Soghomonyan, confirmed that Yerevan and Moscow are
discussing the construction of an oil refinery in Meghri on the
border with Iran.

[Passage omitted: reported details]

It is believed that from a political point of view, Armenia may end
up in a difficult situation after the construction of the oil
refinery because of the Azerbaijani-Georgian-Turkish oil and gas
pipelines. Also, given the possibility that Georgia might join NATO,
the situation may be hard not only for Armenia, but also for Russian
military base No 102 deployed in Gyumri and in terms of providing
Russian border guards with electricity. Certainly, this project is
not a new idea. Russian expert Anatoliy Gichman also confirmed this
in his interview with Regnum news agency. According to him, the
future of this project is pessimistic because it was clear when the
project was discussed in 2002 that it will hardly be fulfilled. There
are the following reasons for that: "The economic benefit of the
project is not clear: if Iranian oil is returned to Iran, then why
will the factory be built in Armenia? Second, Iran made us understand
a long time ago that it is not so willing to cooperate with Russian
oil and gas companies and the factory which will be built in the
south of Armenia is only a Russian project. Third, Iran wants to have
such factories in its own territory and is going to do so in 2012,
which means the building of big oil refineries all over Iran."

Moreover, according to the Russian expert, the project would be a
promising one if the Armenian-Turkish border was open and the oil was
supplied to the eastern regions of Turkey. Armenian experts think
that the project has no future. They also think that in order to make
the project a reality, it will be necessary to invest 2.8bn dollars
in the construction of a new Iran-Armenia railway.

Moreover, in order to transport oil from the north of Iran to the
south of Armenia, it will be necessary to build a 200km oil pipeline
from Esfahan to Meghri, which requires extra money. On the other
hand, some Armenian experts say that Iran will not be ready for the
implementation of such a programme for a long period as two of its
big oil refineries were bombed by Iraq during the Iran-Iraq war in
the early 1980s. In a word, Armenian experts think that this problem
has a political nature: in Armenia it is designed for internal and in
Russia for external consumption.