Armenia will speed up its joint projects with Iran in an effort to secure its supplies and extend its export markets. In the coming months, Armenia and Iran will launch three major joint construction projects in the energy sector. The Armenian Minister of Energy and Natural resources Armen Movsisyan said on July 14 that a joint hydropower station on the border river of Araks (near the Armenian city of Meghri), a high-voltage power line connecting the two countries, and a pipeline for exporting oil from Iran to Armenia will be constructed. All the three projects were subject to discussion long ago, but their implementation was delayed for different reasons, including the political instability in Iran since 2009.

The Meghri hydropower station will have two parts (blocks), one near each bank of the river. The Armenian part of the station, whose construction will start this year, was reported to cost US$ 350 million. The station will have a capacity of 140 megawatts and is expected to produce 880 million kilowatt hours of energy per year, which is nearly 15 percent of the current annual electricity production in Armenia. It is expected to be completed by 2012. The approximate cost of the power line is $ 150 million and that of the pipeline is an estimated US$ 160 million. All three projects will be implemented primarily by Iranian firms. In addition, the Iranian side has pledged to provide at least part of the Armenian share of the funding, which Armenia will pay back later. This will be the case for the hydropower station, which Armenia will repay with energy, and with the oil products pipeline, which Armenia will pay with future profits. The oil product pipeline will supply Armenia with petrol and diesel oil at Persian Gulf prices which are US$ 10-15 cheaper per ton than current prices in the Black Sea region where Armenia buys these commodities at present. Besides, the idea of constructing an oil refinery in Armenia to process the crude oil from Iran, which has now been suspended, was not given up completely and might be revived at some point in the future.

The high-voltage line is necessary for increasing the electricity exports from Armenia after the construction of the Meghri hydropower station, along with that produced by a thermal power plant, in exchange for natural gas which Armenia will get from Iran through a recently built pipeline. In recent years, Armenia and Iran have traded electricity at approximate parity. After the implementation of these projects, the Armenian electricity exports will prevail.

Minister Armen Movsisyan expressed the position of his government by declaring that “Our priority is our national security”. He said the pipeline is a safer means for transporting oil products than the Georgian railroad, and that its existence will protect Armenia from dangers like the one it faced during the Georgian-Russian war in August 2008. Besides these projects in the energy sector, Armenia and Iran are also planning two joint transport projects. The modernization (with partial new construction) of a motorway, which will be the shortest link between Iran and the Georgian Black Sea port of Batumi, has already started, and the Asian Development Bank is expected to extend a loan of at least US$ 600 million later this year for this project.

Another, more ambitious, transport project is the 460 kilometer (290 mile) railroad connecting the two countries, which will run through the southern mountainous Armenian  province of Syunik, parallel to the existing railroad which is interrupted by Azerbaijan in its Nakhichevan exclave, like all other communications betwen Azerbaijan and Armenia. Armenia has requested a loan for this project from the Evrazes Foundation of the CIS. Thus, Armenia tightens its ties with Iran despite the international sanctions and problems connected with its nuclear program, concerns shared by the West and Armenia's main ally, Russia.

Moreover, Iranian President Mahmud Ahmadinejad was recently invited to visit Armenia. The terms of the visit are not specified, but Armenian officials have underlined “Iran's unbiased stance on the Karabakh peace process” and have even hinted that Iran may play a role “in the settlement of regional issues”. Thus Armenia seemingly wants to activate Iran’s political role in the region, apparently seeking a counter-balance to Turkey’s regional ambitions.