ARMENIA, IRAN OPEN KEY GAS PIPELINE
By Ruzanna Stepanian in Agarak

Radio Liberty, Czech Rep.
March 19 2007

President Robert Kocharian and his Iranian counterpart Mahmoud
Ahmadinejad inaugurated on Monday a long-awaited pipeline that will
allow Armenia to import natural gas from Iran and ease its strong
dependence on Russian energy resources.

Lighting a symbolic torch, the two leaders officially opened the first
Armenian section of the pipeline during a ceremony held in Agarak,
a small Armenian town on the Iranian border.

The ceremony was delayed by four hours because rain and fog prevented
a helicopter carrying Ahmadinejad and other Iranian officials from
crossing into Armenia. They had to arrive by car.

"This is a historic event. We have turned a new page in
Armenian-Iranian relations," Kocharian declared at an ensued joint
news conference.

Ahmadinejad likewise called the event a "big step" in the development
of bilateral ties. "I am very happy and grateful to Almighty God for
enabling us to open the Iran-Armenia gas pipeline and to provide a
new service to the people of Armenia," he said. "I told my good friend
[Kocharian] that we are very happy because he is happy, the government
of Armenia is happy, and the people of Armenia are happy," he added.

Work on the 40-kilometer section of the pipeline, connected to
a 100-kilometer stretch built on Iranian territory, began in
late 2005 and was financed by a $34 million loan provided by the
Iranian government. The Armenian side is to repay it with supplies of
electricity. The two governments agreed to build a third high-voltage
transmission line connecting the power grids of the two neighboring
nations for that purpose last year.

Officials said Armenia will initially be able to receive only up to
400 million cubic meters of Iranian a year, or less than a third of
its current gas imports from Russia. That capacity will rise to 2.3
billion cubic meters a year after the planned construction of the
pipeline’s second, much longer Armenian section.

Yet even that volume will hardly allow Armenia to re-export Iranian
gas to Georgia and other countries, something which seemed a real
possibility several years ago when the pipeline’s diameter was
projected at 1,500 millimeters. The Armenian government reportedly
agreed to cut it to just 710 millimeters under pressure from Russia
which feared losing its status as the region’s main gas supplier.

Yerevan is also widely expected to grant Russia’s state-run Gazprom
monopoly ownership of the newly built pipeline as part of a complex
2006 deal that reinforced Moscow’s grip on the Armenian energy
sector. Some analysts wonder whether the pipeline will actually boost
Armenia’s energy security under these circumstances.

Ahmadinejad and Kocharian, who made sure only journalists from Armenian
and Iranian state televisions could ask them questions, did not comment
on implications of the likely Russian control of the facility. The
two leaders spoke instead about what they see as huge progress made
in the development of Armenian-Iranian relations over the past decade.

"The peoples of the two countries are determined to further develop
their ties," said Ahmadinejad. "I believe that this [pipeline] project,
which we are putting into practice, will further reinforce friendship
and ties between our peoples."

"As recently as ten years ago our energy systems were not connected to
each other," argued Kocharian. "Now we are talking about constructing
a third high-voltage line and signed today an agreement to build a
hydro-electric plant on the river Arax [marking the Iranian-Armenian
border.]"

Kocharian gave no details of the multimillion-dollar energy project
that has long been discussed by Yerevan and Tehran. Iran’s Energy
Minister Parviz Fattah announced last July that construction of the
Arax plant will get underway "in early 2007."