Russia to gain from Iran-Armenia gas pipeline, energy official says

Arminfo
26 Mar 07

Yerevan, 26 March: Both Armenia and Iran, as well as Russian
businesses, may benefit from gas supplies from Iran to Armenia,
Armenian Deputy Energy Minister Ara Simonyan has said.

He said that the Iran-Armenia gas pipeline will provide the companies
with Russian capital with long-term and stable orders. In particular,
the fifth unit of the Hrazdan Thermal Power Plant (Hrazdan – 5),
currently under construction, and the Armenian-Russian company
ArmRosgazprom [Hayrusgazard] can count on such orders, he said. He
said that Armenia will be paying for the Iranian gas with
electricity. (According to Armenia’s Regulatory Commission on Public
Services, Armenia will supply 3 kWh for 1 cu.m. of received gas.)
Under the agreement, the Yerevan Thermal Power Plant (TPP) is a party
to the gas-for-electricity deal but even after it acquires a 205-MW
combined cycle gas turbine on the loan extended by the Japanese Bank
for International Cooperation (allowing to produce 1.4bn-1.5bn kWh of
electricity annually), it will not be able to process the entire
volume of the imported Iranian gas into electricity. Its current
capacity is 550 MW, out of which only 50 MW is used due to economic
reasons. Under the agreement, Iran will supply to Armenia 1.1bn
cu.m. of gas beginning 2009, and up to 2.3bn cu.m. of gas beginning
2019, Simonyan said. He said that the Yerevan TPP could offer the
remaining Iranian gas to Hrazdan -5 for electricity generation and
then buy electricity at the prices set by the Regulatory Commission on
Public Services and export it. All the countries of the region have
electricity shortage, and only the Armenian energy system produces
more than consumed. He said that the agreement with the Yerevan TPP is
signed for 20 years, and this means that at least for this period,
Iran will be buying electricity generated in Armenia.

Simonyan, however, thinks that due to the present low effectiveness of
the Armenian thermal plants, the efficiency of the gas-for-electricity
deal will be minimal. Currently, the Yerevan and Hrazdan thermal power
plants utilize 372-400 grams of fuel to generate 1 kW of
electricity. The construction of a new unit of the Yerevan TPP and the
implementation of the Hrazdan-5 project will help raise the
effectiveness of the electricity generation, he said. Accordingly,
Armenia could use gas surplus for its own purposes. He said that the
construction of the Iran-Armenia pipeline became a locomotive for the
implementation of modernization projects for the two TPPs as well as
for the construction of two 400-kW electricity lines with Iran and
Georgia.

The construction of the Iran-Armenia pipeline will help strengthen
cooperation between Armenia, Iran and Russia in the electricity and
gas sectors, he said.