Published October 22nd, 2000 - 02:00 GMT

Armenia is important as a potential transit corridor for energy supplies from neighboring countries.  

Note: Information contained in this report is the best available as of August 2000, and is subject to change.  



Armenia is slowly recovering from the effects of its war with Azerbaijan over the territory of Nagorno-Karabakh, which ended in in a cease-fire in 1994.  


Beginning in 1995, Armenia's real GDP has grown, but from a base of only roughly half of the country's 1990 output, prior to the war and the decline of its Soviet era industrial enterprises.  


Following real GDP growth of 7.2 percent for 1998, growth slowed to 3.3 percent in 1999, and is projected at only 2.0 percent for 2000. In part, this slowing reflects a crisis of confidence caused by the assassination of the prime minister and other government officials in October 1999 and the political instability which has followed.  


Armenia's government has taken steps to reform itself from a planned economy into a market economy. Armenia has introduced its own currency, lifted most trade barriers, instituted its "Law on Foreign Investments" in July 1994, and introduced a wide-scale privatization plan.  


In February 1995, the United States government granted Armenia duty-free status under the Generalized Systems of Preferences, which is targeted at assisting developing nations. In 1996, Armenia began a 4-year economic program aimed at modernizing decaying infrastructure, refurbishing electric power plants, and generally reforming the economy in a market-oriented direction.  



Armenia has no oil production, known reserves, or refineries, so it is completely dependent on imports of refined products. Since there are no petroleum product pipelines into Armenia, all of Armenia's imports must be transported either by railcars or trucks. Most of Armenia's estimated 5,000 barrels per day (bbl/d) in petroleum product imports comes from the Batumi refinery in southern Georgia.  


While a modest amount of oil exploration within Armenia was undertaken in the mid-1990s, mostly by Greek and U.S. firms, the Armenian energy minister announced in April 1999 that exploration activity has ceased due to a lack of funds.  


Armenian officials occasionally have spoken of potential cost savings if the main pipeline for oil exports from Azerbaijan to the Turkish port of Ceyhan were built through northern Armenia. 


This seems unlikely, however, due to the lack of a final resolution to the dispute over Nagorno-Karabakh, and Azerbaijani officials have stated publicly that they would not consider the idea, since the route through Georgia has already been decided.  



Armenia currently receives all its natural gas -- about 49 billion cubic feet in 1998 -- from Turkmenistan through Russian and Georgian pipline networks. The gas is purchased through the private Itera Company.  


Over the past several years, these supplies have been cut off sporadically because of ethnic and civil unrest in the Caucasus, pipeline accidents, and non-payment of debts. The most recent gas crisis was in April 2000, when gas supplies were reduced and then restored in a dispute over payments.  


Gas distribution in Armenia is handled by Armrosgazprom, a company which is jointly owned by the Armenian government, Gazprom, and Itera.  


Armenia recently has been exploring the option of using other gas suppliers, mainly Iran. One project under consideration would involve a $120-150 million pipeline linking the Armenian and Iranian gas grids, allowing import of Iranian gas into Armenia, as well as possible Iranian exports to Europe through the Russian gas grid.  


Armenia has been seeking funding for the project from the World Bank, and Greek officials have met with their Armenian counterparts about possible Greek participation in the project. Financing for the project has not been finalized.  



Faced with an acute energy crisis, Armenia resumed operation at Unit 2 of its Metsamor nuclear power plant at Yerevan in late 1995. Metsamor was closed in 1989 because of seismic and safety fears, and the controversial move to reactivate it was taken largely out of desperation.  


While European countries have pressed Armenia to close the plant by 2004, recent statements from the Armenian government have stressed that this will be contingent on the country securing an alternative source of electricity. Metsamor was shut down for maintenance in July 2000, but is expected to resume operation in 3-4 months.  


Nuclear power and hydropower are Armenia's only indigenous sources of energy. As of 1998, hydroelectricity accounted for about 26 percent of the country's electric power generation, with nuclear power approximately 25 percent and thermal power 49 percent.  


Armenia has several hydroelectric plants on the Razdan River, with plans to develop additional hydroelectric projects.  


In addition to hydroelectric and nuclear power, Armenia has three fully operational thermal power plants (Yerevan: 550 megawatts; Hrazdan oil and gas plant: 1,110 megawatts; and Vanadzor: 96 megawatts).  


All these plants have exceeded their projected operating lifespans, are inefficient, and require renovation. In addition, acquiring fuel for these plants remains a challenge.  


Armenia began supplying some of its surplus electricity to Georgia in late 1998. Iran and Armenia also have linked their electric grids, allowing power sales in both directions, driven by seasonal differences in demand between the two countries.  


Armenia's electricity sector is in the process of privatization. The Armenian parliament approved a bill to facilitate the privatization program in July 2000. Four companies have made offers for the assets, including ABB of Sweden, AES of the United States, EDF of France, and Electrica Fenosa of Spain. Several small-scale hydrolectric dams already have been sold to private investors.  



Proven Fossil Fuel Reserves (1/1/00): None  

Fossil Fuel Production (1998E): None  

Oil Consumption (1999E): 5,000 barrels per day (bbl/d)  

Crude Oil Refining Capacity (1/1/00): None  

Natural Gas Consumption (1998E): 49 billion cubic feet  

Electric Generation Capacity (1/1/98E): 3.0 gigawatts  

Electricity Generation (1998E): 5.7 billion kilowatthours  



Gas Company: Armrosgazprom  

Major Ports: None  

Major Oil and Gas Fields: None  

Major Pipelines: North Caucasus-Transcaucasus natural gas pipeline from Russia through Georgia to Yerevan. A second gas pipeline from Azerbaijan was closed after fighting began between Azerbaijan and Armenia.  

Major Refineries (crude oil capacity): None  

State Electric Utility: Armenergo  

Major Power Plants (capacity): Yerevan (Medzamor) nuclear plant (2 units/815 MW total); Hrazdan oil/gas plant (1,110 MW); Yerevan heat/power plant (550 MW); Sevan-Hrazdan hydroelectric plant and smaller plants (925 MW).  

Source:United States Energy Information Administration. 

© 2000 Mena Report (

You may also like