Bijan Zanganeh, the Iranian oil minister, has reiterated government goal to triple exports of natural gas to neighbouring Armenia to 3 million cubic metres by the end of 2018. This moves as Iran is stepping up the proportion of gas-to-power barter between both countries.
Gas exports are part of a bilateral deal, signed in 2004, which earmarks the Iranian gas for use in Armenian power plants and obliges Armenia to export most of the electricity back to Iran. More gas supply will see Armenia step up electricity exports to Iran under a revised formula of 3.2 kWh for 1 cubic metre of Iranian gas.
Keen to import more electricity, Iran has increased pressure on its northern neighbour to construct a new power interconnector. Once built, the new grid link is meant to step up bilateral electricity trade from currently 300 MW to around 1,000 MW.
Most of the exports under the gas-to-power barter are used to fuel the upgraded Yerevan CCGT, which has an installed capacity of 242 MW electric and 434.9 GJ/h thermal and produces around a quarter of Armenia’s electricity output. The plant upgrade came at a cost of $247 million and was financed by the Japan’s JBIC at an interest rate of 0.75% over a 40-year tenure.
Transiting gas to Georgia
Strengthening relations with Armenia is vital for Iran as it seeks to increase gas transits to Georgia.
To that end, the current main Armenian buyer of Iranian gas will be replace with a more general body which will earmark parts of the supply for the Yerevan CCGT while reserving a fixed portion for onward sales to Georgia.