Armenia is negotiating with Iran the price at which it can purchase natural gas from the Islamic Republic, according to Deputy Minister of Energy Infrastructures and Natural Resources Hayk Harutiunian.
“We have not agreed on the price yet. If we succeed [in the negotiations], Armenian consumers will be able to use Iranian gas already in the near future,” the official said in an interview with RFE/RL’s Armenian Service (Azatutyun.am) on Friday.
Harutiunian led a delegation on a visit to Tehran on October 31-November 1 during which representatives of Armenia’s Energaimpex Company and the National Iranian Gas Export Company initialed a memorandum of understanding on Armenia’s purchase and transit of Iranian natural gas.
Armenia currently imports up to 500 million cubic meters of Iranian gas annually through a pipeline built in 2008. By comparison, Russian gas supplies to the South Caucasus country total around 2 billion cubic meters.
Iranian gas has until now been purchased by a state-owned Armenian thermal-power plant. The plant pays for it with electricity delivered to Iran.
Recently, Yerevan reportedly offered to buy additional volumes of Iranian gas, some of which could be re-exported to Georgia, and the Iranian side is said to have accepted the proposal.
The Armenian Ministry said that on the visit to Iran its delegation discussed prospects of transiting Iranian gas to third countries via Armenia with Iran’s deputy oil minister and a senior National Gas Export Company representative.
“First the deal will create an opportunity for the transit of Iranian gas through the territory of Armenia. Secondly, it will be the purchase of Iranian gas for domestic consumption. Iranian gas will be used for domestic consumption when its price is competitive with other sources,” said Harutiunian.
At present, Russia supplies natural gas to Armenia at a price of $150 per thousand cubic meters at the border. Russian gas monopolist Gazprom’s subsidiary that owns Armenia’s gas distribution network then sells it at a price of about $306 and $257 to households and large businesses, respectively.
Earlier this week Gazprom Armenia offered to cut the prices to about $290 and $242.1 as well as introduce new tariffs for poor families and some types of businesses.
The Armenian Public Services Regulatory Commission, which is considering the distribution network’s application now, is likely to approve it, with the new tariffs becoming effective from January 1.
So far it has been widely speculated in Armenia that the main reason why gas imports from Iran do not increase is that Gazprom raises obstacles to such a deal.
Artashes Tumanian, the Armenian ambassador to Iran, told RFE/RL’s Armenian Service last month, however, that Russia will not object to Yerevan’s increased energy cooperation with Tehran because the deal “does not run counter to anybody’s interests.”
Deputy Minister Harutiunian also insisted that “there have never been any restrictions to importation of Iranian gas to Armenia.”
“The issue has always been in the price domain. If as a result of negotiations the Iranian side can offer us a more affordable price, we will use that gas for our domestic market,” he said, stressing that such negotiations have also taken place before.
“Diversification of energy sources is one of the most important directions of our country’s energy security strategy. We have always been working in this direction,” the official said, stressing that the first step in the direction was taken still when the gas pipeline with Iran was built eight years ago. “Simply, we are trying to gain maximum benefit from the current situation in the region,” Harutiunian added.
Shortly after it was built the gas pipeline connecting Iran and Armenia was purchased by Gazprom, which added to the speculation that Russia objected to large imports of Iranian gas to Armenia.
Asked whether Energaimpex planned to build another pipeline for importing Iranian gas, Harutiunian said: “No, there is no economic justification for building a separate gas pipeline at the moment. The Transgaz company, which also belong to Gazprom, according to provisions in its license, will have the obligation to pump the gas that will be purchased from Iran and transited, for example, to Georgia. It has tariffs that are approved for gas transit and an approved level for losses in order to carry out that transaction. In other words, we don’t need to invent something new here.”
To the clarifying question whether Armenia will still have to secure Gazprom’s agreement to its deal with Iran, Harutiunian said: “No, it won’t.”