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Armenia, Iran Agree To Relaunch Energy Projects


Iran - Energy Minister Hamid Chitchian (L) and his Armenian counterpart Yervand Zakharian sign a memorandum of understanding in Tehran, 16Dec2014.

Iran - Energy Minister Hamid Chitchian (L) and his Armenian counterpart Yervand Zakharian sign a memorandum of understanding in Tehran, 16Dec2014.

Armenia and Iran have reportedly agreed to start building early next year a third high-voltage transmission line connecting their power grids which is expected to lead to a sharp increase in Armenian electricity exports to the Islamic Republic.

The energy ministers of the two neighboring states also said after talks in Tehran this week that the delayed construction of a big hydroelectric power plant on the Arax river marking the Armenian-Iranian border should start by the beginning of 2016.

Both multimillion-dollar projects were high on the agenda of a meeting of an Armenian-Iranian intergovernmental commission on economic cooperation that took place in Iran’s capital on December 15-16. The commission is co-headed by Iranian Energy Minister Hamid Chitchian and his Armenian counterpart Yervand Zakharian.

Armenia/Iran - The Arax river separating Armenia and Iran.

Armenia/Iran - The Arax river separating Armenia and Iran.

In a statement issued late on Thursday, the Armenian Ministry of Energy and Natural Resources quoted Zakharian as saying, “We agreed with the Iranian side to begin the construction [of the transmission line] in March 2015 and finish it within 18 months. The construction of that line will allow Armenia to increase electricity supplies to Iran from the current 1.2 billion kilowatt/hours to up to 7 billion kilowatt/hours.”

That electricity is generated by Iranian natural gas delivered to Armenian thermal-power plants. According to government figures, Armenia imported 500 million cubic meters of gas from Iran last year, compared with approximately 2 billion cubic meters imported from Russia.

The sharp increase in electricity exports anticipated by Yerevan will presumably require much higher volumes of Iranian gas supplies. There was no word on that in the Armenian Energy Ministry statement and Iranian news agency reports on the latest Armenian-Iranian talks.

The Tasnim news agency quoted Zakharian, who also met with Iranian Oil Minister Bijan Zanganeh, as saying that Armenia is aiming to double its trade with Iran, which exceeded $300 million in 2013. He cited other bilateral energy projects planned by the two governments.

The $350 million Arax hydroelectric plant is the largest of those projects. Work on the facility was supposedly launched by an Iranian company two years ago at a ceremony attended by President Serzh Sarkisian. However, it emerged in late 2013 that it has still not begun.

Iran’s ambassador to Armenia, Mohammad Reisi, subsequently blamed the delay on serious restrictions imposed by Yerevan on cash operations between Armenian and Iranian banks due to Western sanctions against the Islamic Republic. Reisi said in March that the recent easing of those sanctions bodes well for the project’s implementation.

The transmission line construction was also supposed to get underway in 2012. Armenian Deputy Energy Minister Areg Galstian said in May that it has been delayed because “the bank financing it has run into difficulties.” He did not elaborate.

Iran - President Hassan Rouhani meets with Armenian Prime Minister Hovik Abrahamian, Tehran, 20Oct2014.

Iran - President Hassan Rouhani meets with Armenian Prime Minister Hovik Abrahamian, Tehran, 20Oct2014.

A memorandum of understanding signed by Zakharian and Chitchian after the commission session says that the two sides will complete preparations for the plant’s construction by October 2015 and most probably launch within the next several months. The construction itself is due to take five years.

“The latest round of talks resulted in important agreements, which will bring about the expansion of our economic and commercial cooperation in the near future,” the Iranian energy minister said, according to the Mehr news agency.

Armenian-Iranian energy cooperation was a key focus of Prime Minister Hovik Abrahamian’s official visit to Tehran in October. Zakharian was among six Armenian cabinet members who accompanied him on the trip. Meeting with Abrahamian, Iranian President Hassan Rouhani spoke of “bright prospects” for expanding bilateral ties.

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