WITH POWERLINES ENERGIZED, ARMENIAN ELECTRICITY

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000150

SIPDIS

SIPDIS

DEPT FOR EUR/CACEN

E.O. 12958: DECL: 02/02/2016
TAGS: ENRG PREL RS GG AJ IR AM
SUBJECT: WITH POWERLINES ENERGIZED, ARMENIAN ELECTRICITY
FLOWING TO GEORGIA

REF: YEREVAN 130

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

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SUMMARY
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1. (C) The flow of natural gas from Russia through Georgia
has continued at full capacity (9 million cubic meters daily)
without interruption since January 31. The GOAM energized
two power lines to Georgia (reftel) which have supplied an
average of 125 megawatts since the thermal power unit in
Hrazdan returned to peak capacity (200 megawatts) on January

31. On February 1, the GOAM energized a third power line to
Georgia which has boosted total capacity to the pre-January
22 level of 150 megawatts. With electricity export
obligations met, and a small gas surplus remaining, Armenia
began restoring strategic reserves at its Abovyan storage
facility. Though this is a wasteful process (for technical
reasons associated with gas compression in cold weather),
Armenia appears to be rushing to fill reserves, and diversify
sources, ahead of a price hike for Russian gas on April 1.
End Summary.

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ELECTRICITY FLOWING TO GEORGIA
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2. (SBU) On January 30, the flow of natural gas from Russia
returned to full capacity (9 million cubic meters daily),
according to ArmRosGazProm spokeswoman Shushan Sardaryan.
The same day, a thermal power unit in Hrazdan returned to
peak capacity (200 megawatts). With enough energy to resume
exports, the GOAM immediately energized two power lines to
Georgia (reftel) which have provided an average of 125
megawatts since January 31. On February 1, the GOAM
energized a third power line near the Baghratashen border
crossing (Lalvar) which, according to Deputy Minister of
Energy Areg Galstyan, boosted electricity exports to the
pre-January 22 level of 150 megawatts.

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EXCESS RUSSIAN GAS SLOWLY FILLING ARMENIAN RESERVES
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3. (SBU) With electricity export obligations met, and a small
surplus of natural gas accumulating, Armenia began restoring
strategic reserves January 31 at its Abovyan storage
facility. According to ArmRosGazProm spokeswoman Shushan
Sardaryan, the company is depositing an average of 2 million
cubic meters (mcm) daily. The Abovyan facility holds
approximately 80 million cubic meters of useful capacity,
which Deputy Minister of Energy Galstyan estimated would take
about "a month and a half" to replenish. (Note: At the
current rate, Armenia would restore its strategic reserves
just ahead of the anticipated Russian gas price hike, from
USD 56 to USD 110 per thousand cubic meters. End Note.)

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RUSHING TO BEAT THE RUSSIAN PRICE HIKE
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4. (C) According to PA Consulting's Deputy Chief of Party
Armen Arzumanyan, who has worked with Armenian energy
regulators for several years, "it's a big gamble, and a
costly mistake, if the government doesn't refill Armenian
reserves while they have the opportunity." Though a
"wasteful" process (technical reasons associated with gas
compression in cold weather reduce the volume of gas in
storage),Arzumanyan said GOAM energy officials would rather
lose some gas in the process than pay twice as much to refill
the reserves after April 1.

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ARMENIAN NEWS REPORTS ON IRAN-ARMENIA NEGOTIATIONS
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5. (SBU) Armenpress news agency reported February 1 that a
delegation to the Iranian-Armenian Intergovernmental
Commission which includes Presidential Chief of Staff
Artashes Tumanyan, Minister of Energy Armen Movsisyan, and
Deputy Minister of Foreign Affairs Arman Kirakossian) was
scheduled to return from Tehran on February 2. The
delegation, according to the report, was in negotiations to
speed the construction of the Iran-Armenia pipeline
(currently scheduled for completion in 2007),and increase

YEREVAN 00000150 002 OF 002


Iranian participation in the construction of thermal power
stations, power lines, and electricity transfer substations
in Armenia.

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COMMENT: NEXT STEPS: REFILL RESERVES, DIVERSIFY SOURCES
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6. (C) Armenia has taken its near-miss energy crisis in
stride, focusing on the country's next steps to hedge future
threats, meeting its obligations to supply electricity to
Georgia, and seeking to diversify sources of energy. With
the energy situation relatively stable for the moment, we
anticipate the GOAM delegation will return from Tehran with
plans to continue, and possibly expand, cooperation with
Iran, particularly regarding energy.
EVANS