BACKGROUND: The idea of exporting Iranian natural gas via a pipeline Armenia and through it to Georgia and Ukraine emerged shortly after the Soviet Union’s disintegration. In search of consolidating their newly-achieved independence, reducing their heavy dependency on Russia and thus decreasing Moscow’s political influence in their countries, the three ex-Soviet states found importing oil and natural gas from Iran a feasible and inexpensive alternative to Russian energy. Tehran was very interested in such prospects as it was eager to increase its fuel exports and particularly its natural gas, whose exports at the time was next to nil despite having the world’s second largest gas reservoirs. The possibility of exporting Iranian gas to the more affluent markets of central and western Europe through Ukraine made both Iran and the three newly-independent states even more interested in the pipeline project as it would significantly increase Iran’s export revenues, while generating a substantial amount of income in transit fees for the rest. Moreover, the growing economic cooperation among Iran, Armenia and Turkmenistan made feasible exporting Turkmen gas to Armenia via Iran. Such project could eventually lead to Turkmen gas export to Europe via Armenia. All these ideas went beyond expressions of interest in the 1990s as Iran concluded agreements with Armenia for gas exports to that country and negotiated such exports with Georgia and Ukraine. Likewise, Iran, Armenia and Turkmenistan reached an agreement in principle for exporting Turkmen gas to Armenia via Iran. Despite the enthusiasm in all the mentioned countries, none of the envisaged projects materialized for various reasons, including Washington’ opposition to any project improving Iran’s economy and increasing its political and economic influence in the CIS countries. The latter denied adequate financing for the projects.

IMPLICATIONS: After years of delay, Iran and Armenia began implementing their gas project in September 2004. Being under construction, the required 142-kilometre Iranian-Armenian gas pipeline of which 42 kilometers will be laid in Armenia is scheduled to be fully operational at the end of 2006, if everything goes well. Through the pipeline, Iran will export 36 billion cubic meters of gas to Armenia over a 20-year period. The actual beginning of its construction has created a realistic ground for Georgia’s optimism that its extension to that country could well become feasible as evident in Georgian Prime Minister Noghaideli‘s reported discussion with his Armenian counterpart. Apart from Tbilisi’s initial interests, the growing tension in Georgian-Russian relations has prompted its recent expression of interest in the pipeline project. The worsening of these relations is very likely owing to Russia’s role in Georgia’s breakaway republics of Abkhazia and South Ossetia, Tbilisi’s demand for the closure of the three Russian military bases in Georgia, and Russia’s concern over the growing American military presence in Georgia. Given this likelihood, Georgia’s heavy energy dependency on Russia is imprudent. Connecting the Iranian-Armenian pipeline to Georgia’s gas pipeline network with a short and relatively inexpensive pipeline feasible in a short period of time would not only address its current vulnerability in its relations with Russia, but that possibility with its limiting impact on Russia’s influence in Georgia could well be used as a leverage by the Georgians in their dealing with Moscow. Perhaps, such considerations are among the factors prompting the Georgian government with a clear pro-American orientation to reach out to Iran even as the U.S. is seeking to deny Tehran economic gains and political influence, especially in the Caucasus. Against a background of Ukraine’s friendly relations and significant economic cooperation with Iran, the new Ukrainian government has also sought to deal with its heavy energy dependency on Russia by importing Iranian gas. Thus, on 6 March 2005 Iranian and Ukrainian government representatives met in Kiev to discuss the implementation of a pipeline project to transport Iranian gas to Ukraine. The Ukrainian deputy minister of oil and energy in a meeting with Iran’s Deputy Foreign Minister for International Affairs Nejad Hosseinian called for annual purchase of 15 billion cubic meters of gas from Iran. The envisaged gas pipeline will pass either through Iran, Armenia, Georgia and Russia or through Iran, Armenia, Georgia and the Black Sea. To make a final decision, the two countries’ representatives are scheduled to meet in Tehran in May 2005 to discuss the pipeline project’s implementation, including its construction and financing, and the amount of gas to be exported. Given the American concern about Iran, the move of the newly-elected Ukrainian government with its clear pro-American tendency reflected Kiev’s deep concern about its ties with Moscow and the necessity to address its heavy fuel dependency on a potentially unreliable energy supplier.

CONCLUSIONS: The ongoing construction of the Iranian-Armenian gas pipeline is a major event for the two sides. Despite this positive development, thanks to the growing hostility between Tehran and Washington, the latter’s effort to deny Iran any major economic gain in its foreign relations and Tbilisi’s and Kiev’s recent political shift towards the United States, the feasibility in the near future of the linking of the Georgian and Ukrainian gas grids to Iran is uncertain. However, apart from their economic importance, the two projects are significant for at least two reasons. They reflect an attempt by Georgia and Ukraine to decrease their energy dependency on Russia even at the price of annoying the United States, while they signify Tehran\'s success in maintaining good economic relations with Tbilisi and Kiev despite the recent ascension to power of their pro-American presidents. If implemented, Iran’s gas exports to Armenia, Georgia and Ukraine will strengthen ties among the four countries, while limiting to a varying extent the influence of Russia and the United States, two powers with different reasons to oppose the gas projects.

AUTHOR’S BIO: Dr. Hooman Peimani is a Senior Research Fellow with the Centre for International Cooperation and Security (CICS), Department of Peace Studies, University of Bradford, UK.