Global Insight
October 25, 2007

Energy Minister Touts Potential New NPP, Refinery for Armenia

by: Andrew Neff

Armenian Energy Minister Armen Movsisian told journalists this week
that the country could build a new nuclear power plant (NPP) to
replace its ageing Metsamor NPP, with the Metsamor facility likely to
be decommissioned only after a newer NPP is built. Moysisian told
theVoice of Armenianewspaper that a potential new NPP would have a
capacity of 1,000MW, which would provide Armenia with enough power to
meet its own requirements and potentially supply electricity to other
countries in the region. Furthermore, Moysisian said that a proposed
oil refinery in Armenia would have to have a processing capacity of
at least 7-7.5 million tonnes per year (t/y, 140,000 to 150,000
barrels per day) in order to recoup the estimated costs of
construction. Russia’a Gazprom Neft earlier this year proposed such a
refinery for Armenia, which has no refineries at present and is thus
entirely dependent on imports of oil products in order to meet
domestic demand (seeArmenia: 29 January 2007:).

Significance:Armenia is deficient in natural resources, and with
Turkey and Azerbaijan continuing to exert an energy blockade on
Armenia as a result of the conflict in Nagorno-Karabakh, Armenia is
heavily dependent on imports of oil and gas, mainly from Russia.
Armenia is also continuing to operate the Metsamor NPP, despite
safety concerns, in order to generate electricity to meet domestic
requirements, even rebuffing the European Union’s offer of a loan to
close down the NPP, arguing that it is necessary to keep Metsamor
online until a new NPP is built (seeArmenia: 26 September 2007:). The
proposed refinery in Armenia would far outstrip Armenia’s oil
consumption requirements, which stand at around 1 million t/y, but
Moysisian said that a facility with such a capacity would only serve
the domestic market and thus would never recoup its construction
costs.