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Pipeline Explosion Disrupts Armenian Gas Supplies, Raises Concerns

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  • Pipeline Explosion Disrupts Armenian Gas Supplies, Raises Concerns

    World Markets Research Center
    Global Insight
    Nov 12 2009


    Pipeline Explosion Disrupts Armenian Gas Supplies, Raises Rationing Concerns

    BYLINE: Lilit Gevorgyan


    Yesterday, representatives of Armenian gas company Armrusgasard
    announced that an explosion has damaged a segment of the Iran-Armenia
    gas pipeline that provides Armenia with Iranian gas. This has led to
    Iran suspending gas supplies to Armenia. Iran promised to resume the
    gas supply once the damage, in the Armenian section of the pipeline,
    was repaired. The pipeline was only built recently, following a 2004
    agreement between the two countries, and Armenia received the first
    supply of gas in May this year. In exchange for the gas Iran receives
    electricity generated by Armenia's Metsamor Soviet-era nuclear power
    station. Neither Armenia nor Iran have commented on the causes of the
    explosion.

    Significance:The Armenia-Iran gas pipeline provides an energy lifeline
    for the small, landlocked and resource-poor Armenia. Armenia has long
    suffered from inconsistent supplies of gas from Russia via Georgia,
    prompting it to seek more stable supply resources through the
    construction of the pipeline with Iran. The country's businesses and
    population are heavily dependent on gas rather than electricity as it
    is cheaper. Therefore, they are bound to be affected by yesterday's
    pipeline explosion. This has led to fears that rationing could be
    introduced in order to deal with a possible shortage causing
    significant disruption to businesses already struggling to deal with
    the global economic slowdown which has caused a double-digit
    contraction of Armenia's GDP.
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