ARMENIAN RESPONSE TO GAS SUPPLY CUT OFF

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000098 SIPDIS SENSITIVE DEPT FOR EUR/CACEN E.O. 12958: DECL: 01/23/2016 TAGS: ENRG PREL RS GG IR AM AZ SUBJECT: ARMENIAN RESPONSE TO GAS SUPPLY CUT OFF REF: A) TBILISI 141 B) TBILISI 136 C) 04 YEREVAN 2656 Classified By: Ambassador John M. Evans for reasons 1.4 (b, d). (U) Sensitive but unclassified. Please protect accordingly. -------------- SUMMARY -------------- ¶1. (C) Russian gas via Azerbaijan will not flow to Armenia according to Deputy Minister of Energy Iosef Isayan. As a result, Armenia will deplete its reserves by January 31 if Russian supplies through Georgia are not restored. Armenian authorities halted exports of power to Georgia, and began taking "measures to lower gas consumption" which included shutting down two 200-megawatt thermal power units at a facility fifty kilometers outside of Yerevan (Hrazdan, Armenia). Armenia also requested and received a seasonal increase in Iranian electricity imports which, as of January 23, has reached 200 megawatts per hour (up from 110 megawatts per hour). Isayan ensured the Ambassador that he had been in regular contact with his Georgian counterpart, whom he said "understands" that Armenia will not be able to assist with additional electricity. End Summary. -------------- GAS SUPPLIES VIA AZERBAIJAN RULED OUT -------------- ¶2. (C) Russian gas via Azerbaijan will not flow to Armenia according to Deputy Minister of Energy Iosef Isayan. According to Isayan, his Georgian colleague informed him that gas received via Azerbaijan would not now be transshipped onward to Armenia. This decision effectively cuts Armenia off from foreign sources, and begins an eight-day countdown to the total depletion of the country's reserves. (Note: Transshipment agreements signed by both Georgia and Azerbaijan prevent onward shipment of anything transported through Azerbaijan to Armenia. See ref C for details. End Note.) Isayan told the Ambassador that Armenia has "just enough" natural gas reserves to cover the expected interruption of supply from Russia through Georgia. -------------- ARMENIA TAKING STEPS TO CONSERVE ENERGY -------------- ¶3. (SBU) Upon news of the simultaneous loss in gas and electricity imports in Georgia and Armenia on January 22 (reftels),Armenian authorities immediately halted all exports of power to Georgia (approximately 120 megawatts/hour) and also shut down two 200 megawatt/hour units at its Hrazdan Thermal Power Plant about 50 kilometers outside of Yerevan, according to Deputy Minister of Energy Iosef Isayan. Power imports from Iran increased to 200 megawatts/hour up from 110 megawatts/hour, enough to cover some of the decrease in electricity supplies associated with shut down in Hrazdan, according to Isayan. According to Isayan, Armenia has an underground gas storage unit -- the volume of reserves there as of January 23 was 80 million cubic meters. (Note: Useful volume was 55 million cubic meters (the rest has to remain in the storage unit to maintain internal pressure. End Note.) -------------- -------------- "ADDITIONAL SAVINGS MEASURES" IF SUPPLIES NOT RESTORED -------------- -------------- ¶4. (C) With the Armenian Nuclear Power Plant (ANPP) already operating at its maximum output, the GOAM looking at additional steps to take in the event Gazprom is unable to restore supplies. Isayan told the Ambassador that Armenia is currently attempting to lower its consumption of gas by a factor of three, and is exploring options that include the use of Iranian gas, though it was not immediately clear how effective this option would be given the lack of infrastructure linking the two countries. (Note: The Armenia-Iran pipeline is not expected to be on-line until sometime in 2007. End Note.) -------------- COMMENT: NOT YET AT A CRITICAL STAGE -------------- ¶5. (C) Because transshipment agreements prevent onward shipments to Armenia without prior agreement by the parties, Armenia's options for alternative gas supplies are minimal. With conservation measures in place -- and they are -- Armenia has enough gas to last eight days, until January 31. If repairs to the Mozdok - Tbilisi pipeline are delayed beyond Armenia's ready reserves, Azerbaijan's prohibition of onward shipment of gas from Georgia could create real hardship in Armenia. EVANS