Azerbaijan, Baku, 21 October/ Trend /
Vagif Sharifov, director of Trend
This week, Russia officially admitted that it is not favorable to build oil refinery in Armenia. The refinery was to supply Armenia with oil products and also export them. Russia's Minister of Transport Igor Levitin said in Yerevan that the investors are not interested in the project of construction of oil refinery with capacity of 5mln tons a year.
The project was doomed to failure from the early start. Every investor is interested in how much the project costs and how soon it will pay back. As to the oil refinery in Armenia, it turned out to be complicated for the potential investors as the price of petrol in the Armenian filling stations will be higher than that of import fuel. The main reason is the cost of oil refining. Armenia does not have its own oil production and its occupation of Nagorno-Karabakh region of Azerbaijan led to the complete isolation of its economy. In order to supply oil refinery with oil, Armenia will have to buy crude from Kazakhstan through Iran. Armenia can not purchase Iranian oil as Tehran itself buys crude from Russia and Kazakhstan to supply its refineries in the north of the country. It will be complicated for Armenia to buy oil from Russia due to the break of diplomatic ties between Georgia and Russia.
So, by buying Kazakh oil, Armenia will have to pay for its running to the tanker in Kazakhstan's Aktau port, delivering across the Caspian, unloading in Iran's Neka port, delivering it by railway through Iran to the Armenian border and refining in the oil refinery. Furthermore, distribution of oil products in the domestic market of Armenia is complicated by the lack of oil-products pipelines which leads to the high transport expenditures. No one will buy petrol at such high price.
According to the Energy Information Administration (EIA) of the United States, from 2003 fuel consumption in Armenia totaled to not less than 40,000 barrels a day which completely depends on import.
The table below shows Armenia's dependence on import of fuel: (EIA figures) (thous barrels a day)
| Year | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 |
| Consumption | 31 | 32 | 33 | 35 | 37 | 39 | 40 | 41 | 40 | 41 | 41 |
| import | 31 | 32 | 33 | 35 | 37 | 39 | 40 | 41 | 40 | 41 | 41 |
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