Armenia, Georgia, Iran, Russia Mull ‘Regional Energy Market’

Armenia - The energy ministers of Armenia, Georgia and Iran and the head of Russia's Rosseti utility shake hands after signing a memorandum of understanding, Yerevan, 23Dec2015.

The energy ministers of Armenia, Georgia and Iran as well as the chief executive of a leading Russian electric utility met in Yerevan on Wednesday to explore the possibility of significantly boosting power supplies among their countries.

The Armenian Ministry of Energy and Natural Resources said the four nations will be able to establish a common energy market after the construction of two new power transmission lines connecting Armenia with Georgia and Iran.

“We have met today to make sure that we can prepare by 2017-2018 a technical and legal framework for further synchronizing our power grids,” Armenian Energy Minister Yervand Zakharian told reporters after the talks, according to News.am.

Zakharian, Energy Ministers Hamid Chitchian of Iran and Kakha Kaladze of Georgia and the head of Russia’s state-owned Rosseti power transmission and distribution network, Oleg Budargin, signed a relevant memorandum of understanding as a result of the discussion. It was not made public at their joint news conference.

Kaladze stressed the importance of the document when he met with Prime Minister Hovik Abrahamian later in the day. An Armenian government statement quoted the Georgian minister as saying that it will create “favorable conditions” for regional energy cooperation.

“The deepening and expansion of interaction between the energy systems of the four countries will allow for the creation of a regional energy market,” the Armenian Energy Ministry said in a statement. “The parties expressed readiness to coordinate their efforts to advance the program.”

In that regard, the statement stressed the importance of the ongoing construction of a third and a much more powerful high-voltage transmission line that will run from Armenia to neighboring Iran. In Zakharian’s words, the $120 million facility, which is due to go on stream in 2018, will put Armenia in a position to quadruple exports of electricity to the Islamic Republic.

The ministry also emphasized that Armenia and Georgia will soon start building a similar line that will make their power grids far more interconnected. The $115 million project, also slated for completion by 2018, is financed by Germany’s state-run development bank KfW and the European Union.

“The construction of these two lines will allow the four countries to operate their energy systems in a joint and parallel way and increase the volume of electricity exchanges during emergency situations,” the Armenpress news agency quoted Zakharian as saying.

The planned multilateral arrangement is clearly facilitated by the ongoing gradual lifting of international sanctions against Iran. It might also be connected with the Georgian government’s recent decision to consider the possibility of buying natural gas from Russia or Iran. Kaladze said in October that Georgia, which currently buys the bulk of its gas from Azerbaijan, could soon import Iranian gas via Armenia or Azerbaijan.

Earlier this month, Kaladze met in Luxemburg with Alexei Miller, the head of Russia’s Gazprom monopoly. Miller said afterwards that Gazprom is ready to supply large volumes of gas to Georgia through a complex arrangement that would also involve Armenia and Iran.