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By Shakeh Avoyan
After more than a decade of negotiations the Armenian and Iranian governments took on Thursday the final step towards the construction of what they regard as a strategic pipeline that will pump Iranian natural gas to Armenia.

Under an agreement signed by them in Yerevan the supplies are to begin in 2007 and to continue for at least the next 20 years.

“Negotiations on this agreement have lasted for about 12 years and it has become a reality today,” Armenian Energy Minister Armen Movsisian said at the signing ceremony attended by Iran’s visiting Oil and Gas Minister Bizhan Zangane.

“I am very happy that a new phase begins in the relationship between our countries with the signing of this agreement,” Zangane said for his part.

Zangane arrived in Yerevan and met with President Robert Kocharian earlier in the day. A statement by the presidential press service said the gas project will double the volume of Armenian-Iranian trade which stood at $90 million last year.

Officials said work on the 140-kilometer pipeline will start by the end of this year and should be complete within two years. They declined to specify the overall cost of building its 40-kilometer section that will pass through Armenian territory. It was previously estimated at $120 million.

Movsisian said the Armenian side will finance its share of construction work its “own resources” or those of unspecified third countries. He refused to elaborate, saying that the sources of funding are a “commercial secret.”

The Armenian leaders say the pipeline will be of strategic importance for their country as it will provide it with an alternative source of natural gas which is used for meeting approximately 40 percent of its energy needs. Russia has been Armenia’s sole supplier of the vital fuel since the mid-1990s and was until recently uneasy about having a major competitor in the Armenian energy sector 80 percent of which is controlled by Russian firms.

Armenia imported about 1.2 billion cubic meters of Russian gas last year through a single pipeline running through Georgia which is reportedly in poor condition and needs urgent repairs. The agreement commits it to buying almost as much Iranian gas in 2007. The annual volume of Iranian deliveries is due to jump to 2.3 billion cubic meters in the future, raising the question of whether there will be that much demand for the fuel inside Armenia.

The Armenian government will apparently use the gas surplus for boosting its exports of electricity. The agreement stipulates that it will pay the Iranians with electricity. Incidentally, it was signed, from the Armenian side, by the managing director of a big thermal power plant located in Yerevan.

Armenian and Iranian officials have indicated in the past that Armenia could serve as a transit route for Iranian gas exports to third countries, notably Georgia and Ukraine -- an option reportedly opposed by Russia. The Ukrainian government has shown interested in the project ever since its inception, and the issue was on the agenda of Prime Minister Andranik Markarian’s visit to Kiev this week. Markarian was reported to call for Ukrainian involvement in the pipeline’s construction.

(Photolur photo: Zangane, left, and Movsisian speaking to journalists.)
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