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29.10.2010

ARMENIAN ENERGY SECURITY AND ARMENIAN-RUSSIAN RELATIONS

   

Sevak Sarukhanyan

S.Sarukhanyan – Deputy Director of “Noravank” Foundation, the head of the Center of the Political Studies, Candidate of Political Sciences

The agreement on prolonging the term of deployment of Russian military base in Armenia took central place in the discussions during the August visit of the president of the RF to Armenia. But the agreements concerning the energy sector are of no less importance.

The biggest economic projects implemented in the RA after the independence is the operational Iran-Armenia gas pipeline. This rather complex and expensive project is indispensible for the RA by its importance because in case of irregular natural gas supply through the territory of Georgia it can provide normal activity of the energy system of the republic. But, undoubtedly, in the aspect of energy and national security provision the project of building a new power-generating unit of the Armenian Nuclear Power Plant is more important than Iran-Armenia pipeline. This is directly conditioned by the main peculiarities of the energy system of the RA.

Internal environment of the RA energy security provision

Despite some solid investments which have been made in the energy system of the RA for the recent 12-13 years, it still demands serious modernization. Modernization of the Yerevan Thermal Power Plant and building of the 5th power generating unit at Hrazdan Thermal Power Plant by “Armrusgasprom” are the most serious modernization projects carried out in the energy system of the RA. Solving rather important issues, those projects, at the same time, have not settled the most important issue of our energy system, i.e. the issue of increasing of efficiency of energy production capacities. Four power generating units of Hrazdan Thermal Power Plant need modernization and this, in its turn, demands huge investments which will be rather hard to provide. The main reason of the absence of investments is the non-profitability of the energy system of Armenia in general. This is conditioned by two main circumstances:

  1. Armenia does not export large amount of electricity and this deprives the energy producers of possibility to get the market price for their production;
  2. On the territory of the RA the price for the electricity still remains comparably low, because the government restricts the growth of prices in this sphere, taking into consideration its obviously negative influence on the social stability.

Taking into consideration all aforementioned, one can hardly rely on solid investments in the thermal energy sector which in prospect may have a negative impact on the energy security system of the RA.

External environment of the RA energy security provision

The stable functioning of the Russia-Armenia gas pipeline depends not on Armenian-Georgian but on Russian-Georgian relations. In future the gas pipeline may become a “victim” of another Russian-Georgian conflict. The availability of the gas pipeline from Iran Armenia is an alternative to Russian gas but cooperation in energy sector with the Islamic Republic has serious problems and the followings are the main of them:

  1. Iran, most probably, will face the threat of the military strike or intrusion by the Americans for a quite long time. In case if those threats come to life functioning of Iran-Armenia gas pipeline is out question.
  2. It is still unknown at what price Armenia will buy gas from Iran in case of necessity. Despite a high level of Armenian-Iranian relations Tehran would hardly sell Armenia gas at the price which will be much lower than a market price as it happens in case with Russian gas.

Taking into consideration this all, it is difficult to consider thermal energy as a perspective sphere in Armenia. This is, of course, rather big system, but it is rather vulnerable too and the possibility that the energy crisis of 1993 will repeat after shutting down the power generating unit of Metsamor Nuclear Power Plant is rather high. Taking into account the perspective risky character of the natural gas import, the main mission on providing stability of energy system of the RA should be entrusted to the nuclear energy.

Prospects of the nuclear energy in Armenia

Though the decision of the government to remove from service Metsamor Nuclear Power Plant from 2016 has partially been a result of pressure on behalf of the EU, nevertheless, it is reasonable. The functioning Nuclear Power Plant is obsolescent and its capacity will not help to avoid new energy crisis in case of suspension natural gas import. From this point of view the decisions on shutting down of the 400MW power generating unit of the Nuclear Power Plant and almost simultaneous building of a new one (with at least 1000MW capacity) are reasonable in the aspect of the RA energy security provision.

The main problem for Armenia connected with building of new nuclear power generating unit was and still remains the issue of financing. Let us mention one remarkable fact: today the Republic of Armenia take the last place among the counties building nuclear power plants in the aspect of absolute index of the GDP. It is obvious that with such macro-economic indices one cannot implement such an expensive project as building nuclear power generating unit on their own. E.g. Bulgaria which GDP surpass the GDP of Armenian more than 5 times, had to suspend building of Belen Nuclear Power Plant in 2009 because it could not finance the project. And the international investors are not ready to take over financing of the construction of that power generating unit, because they do not know yet whether the project will bring tangible profit in the future.

Almost the same problem is faced by the RA, because in order to promote foreign investments building of the new nuclear power generating unit must be profitable in our country from purely economic point of view, meanwhile it is not so. It is obvious that the RA authorities will restrict the growth of the electricity prices at any cost in order to soften the social burden of the population. In this case those who are going to finance building of new Armenian Nuclear Power Plant must understand that it is impossible to realize super-profits with the help of nuclear station.

That was the factor which conditioned the lack of interest of the investors in the project of power generating unit building. The only state that showed interest in it was Russia, which, according to the agreement concluded on August 20, will undertake the most part of financing of the project. This caused many negatively coloured discussions which may not be stopped in the future either: they say Moscow tends to consolidate its positions in Armenia through building new power generating unit. Of course Moscow tends to do so and such intensions are in terms of its fundamental interests, but it is still obscure why should we treat it negatively? One may have an impression that the United States sponsored Baku-Tbilisi-Ceyhan oil pipeline construction out of sheer humanistic incentives. Undoubtedly, after construction of power generating unit Russian presence in Armenia will become even stronger, meanwhile there has been no serious argument sounded how it affects our interests. There has been no well-grounded argument of how Moscow will use the nuclear power station in order to affect us. Will it demolish it and take it to other country?

Nuclear energy has always been an important political factor. The nuclear energy, just like oil and gas, depends on international economic and political processes and that is why we should not separate it from politics. In this aspect, due to natural and objective reasons, Russia is the only country which can finance and build in Armenia new nuclear power generating unit which in its turn will become a cornerstone of the energy security of Armenia for the next 50 years.

“Globus Energy and Regional Security”, issue 5

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