Prospects of Iran-Armenia gas cooperation depend on Russia: expert
By Jamila Babayeva
Armenia is planning to expand gas cooperation with Iran, which is the second largest natural-gas reserve after Russia.
In addition, Tehran expressed its readiness to supply natural gas to Europe via some pipelines, including the one passing through Armenia, Georgia, and under the Black Sea.
Close gas cooperation between Armenia and Iran seems unlikely because of the fact that Armenia's gas supply system belongs fully to Russia's Gazprom. The Armenian government signed the agreement on the sale of the last 20 percent stake in ArmRosgazprom to the Gazprom in January, 2014.
Professor of economics at US Northeastern University Kamran Dadkhah said that there are many obstacles to the close gas cooperation between Armenia and Iran.
"There are many issues to be settled before such cooperation could expand. A major issue is Russia's interest and attitude toward the deal," Dadkhah told Azernews.
He believes that the deal would be beneficial for both Iran and Armenia.
"Armenia is paying a high price for gas imported from Russia and distributed by Gazprom, which has monopoly over pipeline and distribution network in Armenia," Dadkhah said.
"Armenia is not a rich country, its per capita income (at purchasing power parity) in 2012 was only $7,780 (the World Bank)," he said.
Russia supplies gas to Armenia at a price $221 per 1,000 cubic meters since January 1, 2014 while Iranian gas price is $188, official statistics show.
Dadkhah said Iran has the second proven gas reserves in the world although it lags in developing the fields and extracting gas.
"Indeed, Iran is a net importer of gas. This is partially due to the fact that in recent years gas consumption in Iran has significantly increased," he noted. "If Iran could sell more gas to Armenia and European countries via Armenia, it could keep its stance as the second largest gas reserves in the world. Any cooperation between countries in Central Asia and the Middle East would be beneficial to all."
He does not believe that gas deal between Armenia and Iran will put an end to Yerevan's dependence on Russia.
"Indeed, Russia allowing the deal to go through may be a move to entice Armenia to join Russian Customs Union," he said. "Allowing Armenia to partially substitute cheap Iranian gas for expensive Russian gas in return for closer economic ties with Russia may be a small price."
Dadkhah said Iran has to invest heavily in developing its gas fields. Meanwhile, it needs a pipeline network to export it. "Allowing some of the gas to go to Europe via Armenia would be a small gift to Iran," he stressed. "Russia may ask for closer ties and more cooperation with Iran. But again because of the monopoly power of Gazprom Russia can always cancel the deal."