US embassy cable - 05YEREVAN2118

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 002118 
 
SIPDIS 
 
E.O. 12958: DECL: 12/05/2015 
TAGS: ECON, ENRG, ETRD, IR, AM 
SUBJECT: IRANIAN ENERGY MINISTER'S VISIT TO ARMENIA - 
EVIDENCE OF STRENGTHENING TIES? 
 
REF: A) YEREVAN 1992 B) YEREVAN 1095 
 
Classified By: Amb. John M. Evans for reasons 1.4 (b,d). 
 
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SUMMARY: 
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1. (C) Iranian Energy Minister Parviz Pattah is currently 
visiting Armenia to inaugurate the country's first wind power 
plant and to tour the Fifth Unit of the Hrazdan Thermal Power 
Station.  In September, the Iranian Government (GOI) agreed 
to provide USD 150 million to complete construction of the 
Fifth Unit which is expected to generate between 150 and 450 
megawatts of electricity by 2007.  This visit comes on the 
heels of Armenian Minister of Energy Armen Movsesyan's visit 
to Tehran in mid-November and suggests strengthening ties 
between the two countries in the energy sector.  End Summary. 
 
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WIND POWER:  A SYMBOLIC MOVE TOWARDS RENEWABLE ENERGY 
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2. (C) On December 6, the Iranian Energy Minister Parviz 
Pattah and Armenian Energy Minister Armen Movsesyan presided 
over the opening of the first-ever wind power plant in the 
South Caucasus.  The plant was built thanks to a USD 3.5 
million grant from the GOI and was heralded by the two 
Ministers as an example of the growing ties between the 
energy sectors of Armenia and Iran.  The total output of the 
plant is minimal, approximately 2.6 megawatts.  Deputy 
Minister of Energy Areg Galstyan announced at the event, 
however, that the GOAM plans to expand on this project, 
increasing output to 20 megawatts and building similar 
facilities around the country.  While both sides agreed that 
this plant represents a positive move towards increasing 
renewable energy in Armenia, given the small output, the new 
plant is more symbolic than it is a realistic alternative to 
the Armenian Nuclear Power Plant or the gas that Armenia 
currently receives from Russia. 
 
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GOI FINANCING TO COMPLETE THERMAL POWER PLANT 
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3. (SBU) Pattah was scheduled to visit the Hrazdan Thermal 
Power Plant on December 7.  In late September, the Iranian 
government agreed to invest USD 150 million to complete 
construction of Unit Five of the power plant.  Under the 
agreement, the GOI would complete construction of the plant 
by 2007 and Armenia would pay back the investment by 
providing an equivalent amount of energy to Iran over a ten 
year period once the plant was brought on line.  According to 
press reports, the Fifth Unit's output would range from 150 
and 450 megawatts.  The vast majority of the Hrazdan complex 
was given to Russia under a debt-for-equity agreement in 
2003, but the GOAM retained control of the fifth unit. 
 
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CLOSER ECONOMIC TIES 
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4. (C) In mid-November Armenian Energy Minister Armen 
Movsesyan and Presidential Chief of Staff and co-Chair of the 
Armenia-Iran Joint Economic Commission Artashes Tumanyan 
visited Tehran (ref A).  According to Iranian press reports, 
during the visit Movsesyan signed a contract for an 
unspecified amount with Iran's Export Promotion Bank to help 
finance construction of the Iran-Armenia gas pipeline (ref 
B).  The Armenian delegation also traveled to the Free 
Economic Zone in Jolfa and discussed ways to promote trade 
between the two countries.  Shortly after the visit, the 
Armenian Chamber of Commerce and Industry and the Chamber of 
Industry, Mines and Commerce of the Iranian province of 
Mazandaran signed a memorandum of understanding establishing 
a fund to promote joint projects to facilitate and increase 
trade. 
 
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COMMENT: STRENGTHENING TIES WITH IRAN? 
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5. (C) Pattah's visit to Armenia and Movsesyan's earlier 
visit to Tehran are evidence that Armenia's ties with Iran in 
the energy sector may be strengthening.  The recent 
announcement by Gazprom that it intends to double the price 
charged for natural gas imports to Armenia (septel) is 
another incentive for Armenia to deepen its energy ties with 
Iran and, at the same time, to work towards greater energy 
independence from Russia.  The other key issue in the 
Iran-Armenia relationship is the pipeline between the two 
countries; that issue, however, is covered by the Iranian 
Minister of Oil Kazem Vaziri-Hamaneh and Pattah's visit does 
not appear to have resulted in any major changes concerning 
the pipeline. 
EVANS