RUSSIAN GAS HASN'T REACHED ARMENIA YET

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000127

SIPDIS

SIPDIS

DEPT FOR EUR/CACEN

E.O. 12958: DECL: 01/30/2016
TAGS: ENRG PREL RS GG AJ IR AM
SUBJECT: RUSSIAN GAS HASN'T REACHED ARMENIA YET

REF: A) YEREVAN 119 B) YEREVAN 110 C) YEREVAN 98 D)

MOSCOW 790 E)TBILISI 167

YEREVAN 00000127 001.2 OF 002


Classified By: DCM A.F. Godfrey for reasons 1.4 (b, d).

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SUMMARY
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1. (C) On January 29, Armenia cut gas to its thermal power
plant in Hrazdan (which converts gas to electricity),
reducing the country's average daily consumption to about 3.5
(down from 6.7) million cubic meters (mcm),enough to
conserve about one more day of useful gas reserves. Banking
on reports from Gazprom that natural gas flows should reach
Armenia by "no later than 8:00 p.m." local time January 30,
an ArmRosGazProm spokeswoman told us other significant
rationing measures would not be necessary unless additional
problems delayed delivery. According to Deputy Minister of
Energy Areg Galstyan, the GOAM was looking into initial
reports that portions of the pipeline in Georgia and Armenia
"may have frozen" when supplies were cut, one possible
obstacle, he contends, that could delay restoring the flow of
gas to Armenia. Compounding concerns, a circuit breaker on
one of two main power lines between Armenia and Iran failed
on January 27, leaving Armenia's supply of electricity from
Iran dependent upon the only remaining line. "We are all
hoping the gas reserves will be enough, but we should know at
8 o'clock tonight," Galstyan told us. End Summary.

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ARMENIA: TIME TO TURN OUT THE LIGHTS?
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2. (C) Since the explosions in North Ossetia on January 22,
GOAM officials and ArmRosGazProm executives have predicted
that Armenia's useful reserves contain only enough gas to
last through January 29. ArmRosGazProm spokeswoman Shushan
Sardaryan told us, and a U.S. contractor who works closely
with Armenian energy regulators confirmed, that Armenia cut
gas to its thermal power plant in Hrazdan (which converts gas
to electricity) on January 29, reducing Armenia's average
daily consumption from about 6.7 million cubic meters (mcm)
to "about 3 or 3.5" mcm, enough to last through January 30.
"We are all hoping the gas reserves will be enough, but we'll
know at 8:00 tonight," Deputy Minister of Energy Areg
Galstyan told us.

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DOWN TO THE WIRE?
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3. (C) Banking on the same reports from Gazprom that natural
gas flows should reach Armenia through Georgia by "no later
than 8:00 p.m." local time January 30, ArmRosGazProm
spokeswoman Shushan Sardaryan told us that significant
rationing measures would not be necessary unless additional
problems develop in the pipeline. According to Deputy
Minister of Energy Areg Galstyan, however, the GOAM was
concerned by initial reports that portions of the pipeline in
Georgia and Armenia "may have frozen" when supplies were cut,
possibly adding another obstacle to restoring the flow of gas
to Armenia.

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ELECTRIC SUPPLY FROM IRAN AT MAXIMUM CAPACITY, BACKUP BLOWS
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4. (C) A circuit breaker on one of two main electric lines
between Iran and Armenia failed on January 27, leaving
Armenia's supply of electricity from Iran dependent on the
only remaining line, according to PA Consulting's Deputy
Chief of Party Armen Arzumanyan. Arzumanyan, who has been
working closely with energy regulators here for several
years, told us the lost line does not significantly affect
the flow of electricity from Iran because Armenia's domestic
electric infrastructure (the line linking southern Armenia to
Yerevan) -- running at 400-440 megawatts -- is already at
full capacity. The lost line did, however, mean Armenia now
lacks a backup if the current line were to fail. Arzumanyan
said he had not heard any estimates about the length of time
it would take to restore the failed power line.

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ARMENIAN DELEGATION TO IRAN TO TALK ENERGY
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YEREVAN 00000127 002.2 OF 002



5. (C) Amid ongoing confusion about supplies and timing of
supplies, a GOAM delegation led by Presidential Advisor
Artashes Tumanyan departed for Iran on January 29 for a
long-planned Iran-Armenia Joint Economic Commission meeting
to review, according to a report from Iran's Mehr News
Agency, "the economic and political relations as well as
trade cooperation between the two countries and in
particular, possible avenues for bolstering bilateral
cooperation in various energy fields." (Note: Deputy
Minister of Energy Areg Galstyan told us that Minister of
Energy Armen Movsisyan also planned to travel with the
delegation to Tehran. End Note.)

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COMMENT: CUTTING IT CLOSE
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6. (C) Armenia's electric infrastructure is stretched beyond
capacity and the country's natural gas reserves are almost
depleted. As the GOAM hopes for delivery of Russian gas free
of complications, officials are also planning conservation
measures (just in case). If the flow of gas, currently
scheduled to resume by 8:00 P.M. (local time) January 30, is
delayed, energy officials have few options for avoiding
significant rationing and widespread outages of the kind
reported in Georgia (ref E).
EVANS