Iran and Armenia signed a memorandum of understanding on Tuesday to extend a gas-for-power barter agreement until 2030.
The MoU was signed in Tehran between Armenian Prime Minister Nikol Pashinyan and Managing Director of the National Iranian Gas Company Majid Chegeni, the Oil Ministry’s news agency Shana reported.
“We’re currently exporting 1 million cubic meters of gas to Armenia on a daily basis, which figure will be doubled on the basis of the new agreement,” Chegeni said.
A 20-year contract signed by the two countries in 2004 took effect in mid-2009, based on which Iranian natural gas is bought by Armenia against supplying electricity to Iran.
Tehran receives 3.2 kilowatt-hours of electricity in exchange for 1 cubic meter of natural gas.
The gas is destined for the northwestern neighboring country via a 30-inch pipeline with an annual capacity of 2.3 billion cubic meters.
Earlier this year in May, Iran announced that it was ready to start gas swap with Turkmenistan to increase gas exports to Armenia.
Iran has the infrastructure for increasing gas import and undertaking swap with neighboring countries to 40 million cubic meters per day, or 15 billion cubic meters per year.
Iran has started transferring 5 mcm of natural gas per day (2 bcm per year) of Turkmenistan, located to the east of the Caspian Sea, to Azerbaijan, on the western side of the sea, based on a trilateral agreement reached last November.
Of the total volume of gas received from Turkmenistan, about 20% are Iran’s share as swap fee and the rest is delivered to Azerbaijan.
Iran has major natural gas fields in the south but has imported gas from Turkmenistan since 1997 for distribution in its northern provinces, especially during the winter.
Experts believe that the swap deal with Turkmenistan could encourage other countries in the region to sign similar deals and use Iran’s gas supply capacities.
Having the largest high-pressure gas pipeline network after Russia, Iran can play a key role in transferring gas from east to west.
Iran is willing to start swapping oil and gas from Caspian Sea littoral states, provided Russia, Azerbaijan, Kazakhstan and Uzbekistan take reciprocal measures and cooperate with Iran in this regard.
Electricity Swap
Iran is connected to Armenia through two electricity transmission lines and a third is under construction.
The two countries have different seasons of peak electricity demand. Iran exports electricity to Armenia in winter and imports in summer.
Iran's electricity exchange with Armenia will increase fourfold to 1,200 megawatts when the construction of the third power transmission line is complete.
Iran Power and Water Equipment and Service Export Company is the contractor of the third line that is estimated to cost $120 million.
Iran and Armenia have been cooperating for years in gas and electricity swap. Two-way economic and political ties have grown in tandem with trade expansion.
Armenia is exporting 350 megawatts of electricity to Iran per year. With the completion of the third line, this would exceed 1 gigawatt.
The expansion of the line is necessary to synchronize Iran’s power grid with that of Georgia and Russia.
Power plants across the country has an installed capacity to generate 84,000 megawatts of electricity per day.
The new 279-km power line will further strengthen trade between the two countries. It also will help Iran's national power grid to link up with the power grids of Georgia, Turkey and Russia through Armenia.
Iran is the largest exporter and importer of electricity in the Middle East. It trades electricity with two neighbors on its northwestern borders, namely the Republic of Azerbaijan and Armenia.
Under swap deals, Iran exports power to Armenia and Azerbaijan in winter and imports in summer. It also exports power to Turkey and Iraq.
