GEORGIA SHOWS INTEREST IN IRAN-ARMENIA GAS PIPELINE
Marianna Grigoryan

EurasiaNet, NY
April 12 2007

The Iran-Armenia gas pipeline, officially opened on March 19 by
Iranian President Mahmoud Ahmadinejad and Armenian President Robert
Kocharian, has quickly emerged as a source of speculation about
regional energy alliances. A trip to Armenia by Georgian President
Mikheil Saakashvili two days after the pipeline’s opening provided
plenty of fuel for conjecture.

According to Armenian presidential spokesperson Viktor Soghomonian,
Saakashvili’s March 21-24 "private" trip was "only for skiing." The
Georgian president stayed in the ski resort town of Tsaghkadzor,
about 55 kilometers from Yerevan, where he met with Armenian President
Robert Kocharian. Later, the Georgian and Armenian foreign ministers,
Gela Bezhuashvili and Vardan Oskanian, joined the discussions.

Neither Georgian nor Armenian officials issued a statement on
the nature of the talks. Even so, Armenian political analysts and
opposition members reject the notion that the trip was for relaxation
only. Rather, they link Saakashvili’s visit – at least indirectly —
to the opening of the Iran-Armenia gas pipeline.

"True, the presidential office did not explain why Saakashvili came
to Armenia. However, it is clear that there was a serious topic for
discussion, and the most urgent of such topics in the region is the
Iran-Armenia gas pipeline," said parliamentarian Shavarsh Kocharian,
head of the National Democratic Party. "If the two countries’ leaders
met, it is impossible that such a serious issue as the gas pipeline
should not have been touched upon."

The 140-kilometer-long pipeline is projected to supply Armenia with
up to 1.1 billion cubic meters (bcm) of gas per year until 2019,
when that supply target is expected to rise to 2.3 bcm annually.

Economist Eduard Aghajanov notes that Georgia’s desire to reduce its
dependence on Russia for gas supplies could have prompted Saakashvili
to explore import possibilities with Armenian officials, as he has
done already with the leadership of Armenia’s neighbor, Azerbaijan.

[For background see the Eurasia Insight archive].

The $235 per 1,000 cubic meters of gas price that Georgia pays to
Russian energy giant Gazprom is the highest rate among members of
the Commonwealth of Independent States. [For details, see the Eurasia
Insight archive.]

"[I]f there is a possibility to receive gas from a third source, then
a reasonable politician would not miss that opportunity by any means,
not to remain hanging on Russian gas," Aghajanov said.

Currently, Georgia receives some 2.3 million cubic meters per day
come from Azerbaijan, including some 1 million cubic meters from the
recently opened Shah-Deniz gas pipeline, Energy Minister Nika Gilauri
told reporters in March. Russia supplies roughly 3.3 million cubic
meters per day, whether via purchases from Gazprom or as transit fees
for the export of Russian gas to Armenia via Georgia.

Some doubt persists in Tbilisi about whether tapping into the
Iran-Armenia pipeline would reduce the country’s energy dependency on
Russia. In June 2006, Gazprom signaled its clear intention to acquire
Armenia’s stake in the pipeline, and posted a press release on its
website stating that it had already made the purchase. Armenian
authorities neither denied nor confirmed report of the sale, saying
that such discussions were premature. [For additional information
see the Eurasia Insight archive].

Beyond geopolitical considerations, technical obstacles appear to
diminish the chances that the Iran-Armenia pipeline could immediately
benefit Georgia. The pipeline’s current capacity stands at only about
300-400 million cubic meters of gas, the Russian news agency Regnum
reported. Its diameter of 770 millimeters – half of its original
size – is not seen as sufficient for exporting gas to Georgia or
other markets.

"No doubt, the Georgian government knows that at the present
moment Armenia has no possibility to export Iranian gas," commented
independent political analyst Sevak Sarukhanian. But that capacity
could change, he added. "[I]f Armenia cannot perform the function of
a transit country at the moment exporting Iranian gas to Georgia,
then in the future it is quite possible. And Georgia would like to
use that opportunity in every possible way."

The notion of Georgia importing Iranian gas via the Iran-Armenia
pipeline is not a new one. Former foreign minister Salome Zourabichvili
raised the issue during an official visit to Yerevan in 2004; talks
on the topic have also reportedly been held between Georgian and
Armenian government officials, including the late Prime Minister
Andranik Markarian.

Georgian officials have previously stated that Georgia will not need
to import Iranian gas if supplies from the Baku-based Shah-Deniz
pipeline, which crosses into Turkey via Georgia, remain adequate. The
Islamic Republic provided emergency supplies during Georgia’s January
2006 gas crisis. At the time, the United States reacted warily to the
prospect of having its closest Caucasus ally, Georgia, forge any kind
of enduring energy relationship with Iran.

Editor’s Note: Marianna Grigoryan is a reporter for the ArmeniaNow
Online weekly in Yerevan