Armenia's Energy sector

[Mher]

Re: Armenia's Energy sector

Diversification of energy supplies is great and yes Russian gas to Armenia is already cheap and Iranian gas is not going to make a difference in the price but it can be strategically important incase instability in Georgia causes interruptions in the supply. There may be a price to pay for diversifying since Russia enjoys a monopoly in Armenia and it may retaliate if the monopoly is broken. The question is what is this price and is it worth it?

But Russian is not exactly cheap. I was very much sold on Russia, and the Russian influence, until some of the details of these deals started coming out. The gas is in fact sold at 393/tcm. Yes its "sold by the Russian Government" at 189/tcm, but GazPromArmenia (aka the Armenian branch of the official company of the Russian Government) pushes it up to 393/tcm, so in fact it is sold at 393/tcm. I would like to know, specially from people in Armenia, (1) how this 393 figure compares to what was charged before, (2) how that additional $200 breaks down, and (3)how this 393/tcm price compares to the final price paid by other countries.

This is one place I believe the Armenian goverment needs to be assertive, and it may be too late with the last 20% of the ownership sold off. It was one thing to step away from the EU and join the Eurasion Union, but to completely leave your fate in the hands of someone else, and have zero bargaining chip is asking way too much by Russia, and is not something any strong leadership should have agreed to.

[Mher]

Re: Armenia's Energy sector

Vrej can you provide some context for this?

1)Can Armenia even use the pipeline network to import non-russian gas now that russia owns the entire gas network?
2)if not, the would this be done through liquidated gas?
3)wouldn't 2 billion cubic meter cover most/all of Armenia's annual need? where would that leave Russia

Armenia Determined to Boost Gas Imports from Iran

http://asbarez.com/121153/armenia-determined-to-boost-gas-imports-from-iran/

[Vrej1915]

Re: Armenia's Energy sector

Vrej can you provide some context for this?

1)Can Armenia even use the pipeline network to import non-russian gas now that russia owns the entire gas network?
2)if not, the would this be done through liquidated gas?
3)wouldn't 2 billion cubic meter cover most/all of Armenia's annual need? where would that leave Russia

Armenia Determined to Boost Gas Imports from Iran
http://asbarez.com/121153/armenia-de...rts-from-iran/

1/ All of the details are in the shadow, the recent past proves that secret closes/deals may remain as such for very long periods, even if that engages the national interests at first degree (remind the 300 MUSD debt that was "revealed" in the wake of Sept 3 2013).
2/ From what officially is aknowledged, all the networks are now 100% russian. The only way Yerevan can play a role, is legislation. And on that point, the Armenian state took the engagement to change nothing before decades....
3/ The first reason why Iran was interested (and in the shadow the EU), was the possibility of transit towards Europe, via Armenia/Georgia/Black Sea/Ukrain. This was also the first and fundamental reason why Russia was categorically against, and practically sabotaged, directly, or via its powns in Yerevan.
4/ Now this possibility is definitely out of the question, by the Crimean transfer of sovereinty. So the transit opportunity for Armenia (Georgia and Ukrain), and risk for Russia (and incidentilly Turkey and Azerbaijan, the most likely option being Turkey) via Armenia is ZERO.
5/ Incidentilly, the Zangezur pipe's potential is the small Armenian, and at best, Georgian Markets for Iran. In this context, Georgia is not really interested, since if there won't be transit royalties of Iranian gas via Armenia, it is much better from an economic perspective, that Armenia continues to import russian gas (10% free for Georgia), rather than the reverse scenario.
6/ Iran (and in their back the West/US) seems to have realized too late, that the Russians out-maneuvered them, and took Armenia as an easy and cheap gain. In this context, the implications for Iran's national security (and the US/West interests) might be considered worth enough for Iran, to offer as a 'grant' (no matter the price) 2 Billion CM3 a year, to have some hold on Yerevan. (Any way, as I already mentioned, it's not like it will cost them much, since they do not have any opportunity to sell that to an other client in Europe or Asia by now: those 2 Billion will remain underground, and represent an insignificant portion of their huge reserves).
7/ Most probably, all this will remain talk, as too often when it comes to Iran related major projects, no matter all the fuss.... (remind the Meghri dam, that was supposed to be half built by now... only the ceremony of foundation took place, with Serjik's participation). It might also end as a barter KWh/gas M3, transformed in Russian owned Hraztan V....
8/ If ever anything will happen, it might be after a russian OK, due:
- to absence of any risks toward their Gazprom interests.
- the possibility to deprive Georgia of its 10% tax of transit.
- the financial bonanza that might represent for Gazprom, if in reality, Iran really offers very cheap gas, they will retail on Armenian consumers.


Bet and wait......

[Mher]

Re: Armenia's Energy sector

1/ All of the details are in the shadow, the recent past proves that secret closes/deals may remain as such for very long periods, even if that engages the national interests at first degree (remind the 300 MUSD debt that was "revealed" in the wake of Sept 3 2013).
2/ From what officially is aknowledged, all the networks are now 100% russian. The only way Yerevan can play a role, is legislation. And on that point, the Armenian state took the engagement to change nothing before decades....
3/ The first reason why Iran was interested (and in the shadow the EU), was the possibility of transit towards Europe, via Armenia/Georgia/Black Sea/Ukrain. This was also the first and fundamental reason why Russia was categorically against, and practically sabotaged, directly, or via its powns in Yerevan.
4/ Now this possibility is definitely out of the question, by the Crimean transfer of sovereinty. So the transit opportunity for Armenia (Georgia and Ukrain), and risk for Russia (and incidentilly Turkey and Azerbaijan, the most likely option being Turkey) via Armenia is ZERO.
5/ Incidentilly, the Zangezur pipe's potential is the small Armenian, and at best, Georgian Markets for Iran. In this context, Georgia is not really interested, since if there won't be transit royalties of Iranian gas via Armenia, it is much better from an economic perspective, that Armenia continues to import russian gas (10% free for Georgia), rather than the reverse scenario.
6/ Iran (and in their back the West/US) seems to have realized too late, that the Russians out-maneuvered them, and took Armenia as an easy and cheap gain. In this context, the implications for Iran's national security (and the US/West interests) might be considered worth enough for Iran, to offer as a 'grant' (no matter the price) 2 Billion CM3 a year, to have some hold on Yerevan. (Any way, as I already mentioned, it's not like it will cost them much, since they do not have any opportunity to sell that to an other client in Europe or Asia by now: those 2 Billion will remain underground, and represent an insignificant portion of their huge reserves).
7/ Most probably, all this will remain talk, as too often when it comes to Iran related major projects, no matter all the fuss.... (remind the Meghri dam, that was supposed to be half built by now... only the ceremony of foundation took place, with Serjik's participation). It might also end as a barter KWh/gas M3, transformed in Russian owned Hraztan V....
8/ If ever anything will happen, it might be after a russian OK, due:
- to absence of any risks toward their Gazprom interests.
- the possibility to deprive Georgia of its 10% tax of transit.
- the financial bonanza that might represent for Gazprom, if in reality, Iran really offers very cheap gas, they will retail on Armenian consumers.


Bet and wait......

Thanks for responding, that was a lot of good information, its always great to hear your expertise on these issues.

[Vrej1915]

Re: Armenia's Energy sector

Thanks for responding, that was a lot of good information, its always great to hear your expertise on these issues.

..

[Haykakan]

Re: Armenia's Energy sector

Since the turks and azerisare xxxxxing about the plant so much maybe they should pay for a new one.

ARMENIA'S NUCLEAR PLANT TO RUN FOR ANOTHER DECADE

Turkish Press
March 27 2014

Thursday, March 27, 2014

MOSCOW - The Armenian government has decided to run the 'physically and
technically outdated' Metsamor nuclear reactor for another 10 years,
according to local media in Armenia.

The Metsamor nuclear power plant, which started operating in 1980,
is located 16 kilometers away from Turkey's border, and continues to
produce about 40 percent of Armenia's electricity. However, Turkey
and Azerbaijan object to its existence as they believe it does not
meet international safety standards.

The Armenian government will be given a loan from Russia to operate
the Metsamor for the next 10 years and Russia's State Nuclear Energy
Corporation, Rosatom, will undertake the modernization of the plant
worth US$300 millions to carry out the management of the nuclear
plant afterwards. The agreement between Armenia and Russia to extend
the Metsamor's operation life will be signed on May 1, 2014.

The reactor had more than 100 accidents during its operation and the
European Union requested Armenia on a number of occasions to shut
down the nuclear plant for safety reasons. However, Armenia refuses
these requests due to its increasing energy needs.

[Vrej1915]

Re: Armenia's Energy sector

Why is Russia Silent on Iran’s Gas Courtship of Armenia?
April 2, 2014, by Marianna Grigoryan


Armenia plans to up its natural gas imports from Iran. (Photo: Behrouz Mehri/AFP/Getty Images)
Natural gas flares at a processing facility of the South Pars gas field near the Iranian town of Kangan in January 2014. Armenia recently announced an agreement to increase its import of natural gas from Iran to two billion cubic meters per year – an increase of 75 percent. (Photo: Behrouz Mehri/AFP/Getty Images)
Mystery is swirling around a deal to boost Iranian natural gas exports to Armenia: why does the Kremlin seem to be going along with the idea?

On March 19, Armenian Energy Minister Armen Movsisian announced that Armenia plans to increase its imports of gas from neighboring Iran to 2 billion cubic meters per year, an increase of nearly 75 percent over the current annual volume. In exchange, Armenia would export electricity to Iran.

The announcement marked a sudden turnabout for Armenia: just late last year, officials in Yerevan rebuffed Iranian overtures concerning additional gas sales. Armenian leaders have not commented about what prompted them to change course. Further details are expected when the two countries’ intergovernmental commission meets this May, and if Iranian President Hassan Rouhani, as announced, visits Armenia “soon.”

A curious aspect to the new Iranian-Armenian relationship is the Russian reaction, or lack thereof: Gazprom, the state-controlled energy giant that now controls Armenia’s entire gas-pipeline system and furnishes most of the country’s gas, has not commented on the deal. Its current silence is a sharp departure from the behavior of Russian officials back in 2007, when they pushed forcefully to limit the diameter of the 140-kilometer-long Iranian-Armenian pipeline to preclude the possibility of large-scale exports beyond Armenian borders.

Local observers offer a variety of explanations for Russia’s current position.

Some believe that Russia’s silence is connected with its desire to bring Armenia into the Moscow-led Customs Union by 2015. While the Armenian government is committed to joining the union, popular enthusiasm for it appears to be lagging. Going along with larger and cheaper Iranian gas sales, then, may be a way for the Kremlin to help the Armenian government “sell” the Customs Union to the population. From Moscow’s perspective, the importance of Armenian membership in the Customs Union has increased in the wake of the winter’s events in Ukraine, where an EU-oriented government replaced the disgraced, pro-Moscow administration of Viktor Yanukovych.

“Since it was the Iranian side who first spoke about the low prices of their natural gas, Russia had to give its 'permission' to Armenia … as a strategic ally,” said political analyst Styopa Safarian, a member of the opposition Heritage Party. “Otherwise, it would turn out that Moscow was not a friend, but an enemy who acted against our national interests.”

The price of the proffered gas has not been determined, but Iranian Ambassador Mohammad Raiesi described it as “incomparably low.”

Other observers in Yerevan suggest that Moscow’s silence is the product of the recent, radical change in geopolitical conditions: given the widening divide between Russia and the West over the Crimea crisis, the Kremlin is reshuffling the deck of energy cards that it plays in order to further its diplomatic aims.

“The situation has changed and Russia has to adjust itself to those transformations,” commented Manvel Sargsian, director of the Armenian Center for National and International Studies.

An unanswered question surrounding the Iranian exports concerns the potential for Armenia to re-export a portion of Tehran’s gas. Such a possibility would seem to go against Moscow’s interests, given that the European Union is now heavily dependent on Russian gas, thus providing the Kremlin with considerable diplomatic leverage. Conversely, the United States and EU likely wouldn’t mind seeing Armenia serve as a corridor for Iranian exports to Europe, something that would contribute to the EU’s goal of diversifying its sources of gas imports.

“The United States seems much more willing to have Iranian gas and oil brought to the market, as both a reward for the positive talks with Iran and as a way to hurt Russian President Putin and exploit Russian dependence on high energy prices,” said Richard Giragosian, director of the Regional Studies Center.

The United States, which announced in November 2013 a six-month break in its sanctions on Iranian crude-oil exports, has not commented about the intended Iranian gas sales to Armenia. In recognition of the economic impact of Turkey and Azerbaijan’s blockades of Armenia’s western and eastern borders, Washington has tended to turn a blind eye to Yerevan’s trade dealings with its southern neighbor, Iran.

Representatives of the Ministry of Energy could not be reached for comment about any discussions with the US about the Iranian deal. Galust Sahakian, a senior member of President Serzh Sargsyan’s Republican Party of Armenia, told EurasiaNet.org that any US objections would be “a matter for negotiation.”

Responding to a query from EurasiaNet.org, a US Embassy representative in Yerevan emailed the following statement: “We have direct discussions with the Armenian government concerning US and international sanctions against Iran. We are in constant communication on what activities and transactions are sanctioned and what are not, and we appreciate Armenia’s cooperation in this area.”

Armenia’s reason for seeking “cheap” Iranian gas is clear: the consumer price of Russian gas is a painful issue for Armenians. Consumers currently pay 158,000 drams or $391 per 1,000 cubic meters, a huge sum for a country where one-third of the population of roughly 2.97 million people lives in poverty. Adding irritation to frustration, that price is at least 7.5 times higher than consumers pay in Belarus, a non-gas-producing member of the Customs Union. Prices could soar still higher if an expected 4.2-percent-increase in the wholesale price of Russian gas goes through on July 1.

Already skittish about demonstrations after election-related political upheaval last year, the Armenian government has no interest in seeing energy again become a cause for protests. Nonetheless, questions still persist about how Armenia can import a large volume of Iranian gas and keep Russia, its prime economic and military partner, happy.

On March 28, President Sargsyan described the border price ($189) paid for Russian gas as " the lowest possible price that Russia sells to any country,” and claimed that “no one” talks anymore about the price of gas. He called on Energy Ministry officials to do a better job of raising public awareness that the cost of overhauling infrastructure is responsible for the dramatic difference in the border price and consumer cost, the Regnum news agency reported.

With no attempt at irony, Sahakian, the senior Republican Party official, called Iranian gas Armenia’s “reserve program.”

Analysts doubt that Yerevan makes any decisions on its own about gas. Even if Iran, as promised, supplies bargain-basement-priced gas to Armenia, Gazprom, with its control of distribution, will influence what consumers ultimately pay. “The real question is how much freedom and flexibility Moscow will allow Yerevan to have in terms of expanding its relations and energy deals with Tehran,” said Giragosian.

Editor's note: Marianna Grigoryan is a freelance reporter based in Yerevan and editor of MediaLab.am.

[Mher]

Re: Armenia's Energy sector

Analyst: Armenia's fate may depend on visits of Iranian president and John Kerry

March 11, 2014 | 13:46

YEREVAN. – The Crimea issue may have indirect influence on Nagorno-Karabakh, analyst Ara Papyan told reporters on Tuesday.

Papyan, head of Modus Vivendi analytical center, said Armenia may occur in a deeper isolation as a result of confrontation between Russia and Ukraine.

“Armenia as an ally of Russia will appear in similar isolation with all consequences on Nagorno-Karabakh, too,” he said.

The analyst believes results of Crimea referendum will not be recognized by any state, except for Russia.

“Armenia will be pressurized on the issue, but I cannot say what position Armenian authorities will adopt,” Papyan added.

If West-Russia confrontation continues, West will try to show Russia's allies that partnership with the country is leading to negative consequences.

“Armenia's fate may depend on Iranian president's visit to Yerevan, and on whether he will manage to advance on the agreement on construction of Iran-Armenia-Georgia-Ukraine-Europe gas pipeline. The visit of Secretary of State John Kerry will be crucial, too,” he said.

West and Iran must finally realize whether it is possible to cooperate with Armenia on transit supplies.

http://news.am/eng/news/198375.html

[Hakob]

Re: Armenia's Energy sector

Azerbaijan is among countries that sell gas and electricity to their populations at the highest prices

The government of Azerbaijan has all the chances to minimize utility costs of the citizens, however, Azerbaijan is among the countries that sell gas and electricity to its population at the highest prices, the article in the Azerbaijani news portal "Minval.az" reads.

As the article reads, Azerbaijan that extracts gas sells the natural gas to its population by 100 manats ($ 128) per 1000 m3 - that is 2-3 times more expensive than the cost price. According to the report of the State Oil Company in 2012 the cost price of gas was 44 manats ($ 56) per 1000 m3. In 2011 it was 39.5 manats ($ 50).

One cubic meter of gas, which costs 5.6 cents, is sold to the population of the country for 13 cents. "If we comparing this figure with the figures of European countries that buy 1000 m3 of gas for $ 350-460, we will see that the government is robbing its population," the author writes.

As for the power rates, the author notes that the cost of 1 kWh is 3-4 kopecks (3.8 - 5 cents) in Azerbaijan. The population of the country, however, has it for 6 kopecks (7.6 cents).

"Increase of energy prices in the near future seems inevitable, because the State Oil Company has increased the price of "Azerenergy" gas to 80 manats ($ 127 - approx. Eds.). As a result the cost price of electricity increased," the article reads.

At the same time, the author notes that if the minimum wage in Azerbaijan is 105 manats ($ 134), then in Denmark it is 2700 manats ($ 3460). In this country, the minimum income is about 25 times bigger, while utility rates only 5-9 times bigger.

The article notes that, according to the Azerbaijani State Statistics Committee, citizens spend 65-70% of their income on food. These data suggest that the lion's share of the average monthly salary of the citizens is spent on food, and only a small part of it is spent on social issues. According to international standards, a country in which 35% of the family budget is spent on food is below the poverty line.

That is to say, each citizen in order to improve his living conditions, to get treatment and receive education as well as to meet its needs for non-food products has to reduce the food expenses. Low incomes and high cost of utilities allow the population to have minimum energy consumptions.

As the author notes, the minimum consumer basket presented by the Azerbaijani government has serious flaws.

"The Azerbaijani basket is designed in accordance with Russian standards. It should be stressed here that in Russia they do not use gas and electricity for heating the apartments in winter. Moreover, the heat supply is good in apartments. Therefore, the minimum consumption of gas and electricity in this country is respectively 50 kWh and 10 m3. While in Azerbaijan energy consumption by population in winter exceeds the norm for many times," the material reads.

Source: Panorama.am

[Vrej1915]

Re: Armenia's Energy sector

ԱՄՆ դեսպանը զգուշացնում է կառավարությանը
Lragir.am
Շաբաթ, 31 Մայիսի 2014,




Հայաստանում ԱՄՆ դեսպան Ջոն Հեֆերնը ԱՄՆ-ում է, որտեղ հանդիպումներ է ունենում բիզնես-շրջանակների եւ հայկական կազմակերպությունների հետ, Հայաստան ներդրումներ ապահովելու համար, ինչպես ասվում է դեսպանատան հաղորդագրության մեջ:
Պատասխանելով Ամերիկայի ձայն ռադիոկայանի հարցերին, Հեֆերնը ուշագրավ հայտարարություն է արել: Նա ասել է, որ Որոտանի հէկ-ի վաճառքն ամերիկյան ընկերությանը կարեւոր ազդանշան էր Հայաստանի կողմից: «Խոսքը խիստ կարեւոր՝ էներգետիկ ոլորտի մասին է, որտեղ ի սկզբանե գերակշռում էին ռուսական ընկերությունները: Ես հույս ունեմ, որ գործարքն ազդանշան կդառնա ԱՄՆ-ի եւ Արեւմուտքի երկրների ներդրողների համար եւ մեզ կօգնի ապացուցել, որ Հայաստանը բաց է բիզնեսի համար»:
Հիշեցնենք, որ Որոտանի կասկադն ամերիկյան Կոնտուր Գլոբալ ընկերությանը վաճառելու վերաբերյալ պայմանագիրը կնքվել է, սակայն դեռ ուժի մեջ չի մտել: Ավելին, կառավարության փոփոխությունից հետո էկոնոմիկայի փոխնախարար Արեգ Գալստյանը հայտարարել է, որ «կան տեխնիկական խնդիրներ, օրինակ ենթակայանների վերազինման համար նախկինում համաձայնեցված վարկի հարցով: Կվերցնե՞ն արդյոք նրանք վարկը, կամ կվերցնե՞ն այն պայմաններով, որը մենք ենք առաջարկում: Նրանց ձեռնտո՞ւ է արդյոք աշխատել այդ պայմաններով: Կան ձեւակերպումների, պարտավորությունների հետ կապված հարցեր», ասել է փոխնախարարը:
Երեւում է, Հայաստանի նոր կառավարությունը, հնարավոր է Մոսկվայի ճնշման տակ, որոշել է փոխել պայմանագրի պայմանները: Չի բացառվում, որ ամերիկյան ընկերությանն առաջարկվեն ի սկզբանե անընդունելի պայմաններ ներդրումների ու վարկերի մասով: Եւ ԱՄՆ դեսպանը փաստացի զգուշացնում է, որ եթե պայմանագիրը վերանայվի, դա կնշանակի, որ կմարի վերջին ազդանշանը, թե Հայաստանում բիզնեսը բաց է:
Որոտանի հէկ-ը ապահովում է ոչ միայն Հայաստանի էներգետիկ անվտանգության նշանակալի մասը, այլեւ ռազմավարական տեղակայում ունի: Որոտանի կասկադի վաճառքը նշանակում է ոչ միայն էներգիայի աղբյուրների, այլեւ անվտանգության համակարգի դիվերսիֆիկացիա: Եւ այս գործարքը բացարձակապես հակասում է Ռուսաստանի շահերին:
- See more at: http://www.lragir.am/index/arm/0/pol....MQq3nyKx.dpuf