Analysis Materials 28 December 2005 12:04 (UTC +04:00)

After 15-year pause the Nakhchivan Autonomous Republic (NAR), which is blockade, has received natural gas. Owing to inability of Azerbaijan to provide direct gas supply to NAR, a relevant agreement was concluded with. A contract on Iranian gas delivery to NAR was signed in August 2004 between the Iranian national company on gas export and Azerigas JSC.

In compliance with the document, the delivery of Iranian gas to the NAR will be implemented within 25 years on SWAP basis. Additional payment for conditional transit of Azerbaijani gas is 15%. The Iranian gas delivery will be carried out through the bordering region Julfa, while the Azerbaijani gas вЂ" via Astara District. Under the agreement, the gas delivery to NAR is to comprise 350 million cu m if natural gas in average, following rise in demand the figure can be increased to 500 million cu m.

A project o gas supply to NAR is technologically difficult. Therefore, it was resolved to provide gas supply to the NAR gradually from 2005 to 2007. In the first stage gas pipelines of high pressure with the length of around 70km and gas pipelines with the high and average pressures with the length of 250km were laid. He pipelines were first of all constructed through the territory with difficult relief. Besides, the measuring units and gas distributing stations were constructed. The same time, apartments and houses of community subscribers were provided with gas stoves and gas meters for rehabilitation of the gas supply. In this stage around 11,000 community subscribers were supplied gas.

A solemn ceremony dedicated to the commencement of the Iranian gas delivery to the Nakhchivan Autonomous Republic (NAR) was held in the area of Nakhchivan city gas-exploitation unit on 20 Dec. Azerbaijani and Iranian Presidents вЂ" Ilham Aliyev and Mahmud Ahmadinejdet honored the ceremony.

Iranian gas delivery to the NAR, the first over the past 15 years, was set up on 3 November. Over 12,000 subscribers will be supplied with gas in NAR. Besides, Azerbaijani gas has been delivered to Iran since 1 November for provision of the north-east regions of the country. In the initial stage its is planned to import 52 million cu m of gas a year, in 2006 - 250 million cu m, while from 2007 it is will be increased 350 million cu m.

Addressing to the solemn ceremony the Azerbaijani President said that several bilateral interstate documents have been signed thus far and supported the strengthening of the activities of the intergovernmental commission to implement the document. �Gas delivery to Nakhchivan is the manifestation of the interaction between the countries. But this is not the last step. Big joint projects will be implemented further and an issue of energy exchange will find its resolution. Shortly it is planned to commission power stations working on Iranian gas, which will enable us to fully supply Nakhchivan with electricity,” Aliyev underlined.

“The comment of gas supply to Iran will become a step Hfor deepening the bilateral relationships. The two countries carry out talks on many directions, including spheres of economy, politics, oil and gas, regional and international issues and Caspian problems. We do not lay any limitation on the expansion of relationships with Azerbaijan,” Ahmadinejdet stressed.

Two Memorandums have been signed on 20 December 2005 upon accomplishment of negotiations between the Presidents of Azerbaijan Ilham Aliyev and Iran вЂ" Mahmud Ahmadinejat in the Nakhchevan Autonomous Republic (NAR). The first document is Memorandum “On the use of assistance for development” has been signed by the heads of Foreign Ministries of Azerbaijan and Iran. The second one вЂ" Memorandum “On cooperation in the energy field” has been signed by the heads of states

The document signing ceremony has been followed by the statements made by the both Presidents. President Ilham Aliyev said, during the summit of the heads of states and governments of the Organization of Islamic Conference (OIC) in Mecca he had invited the President of Iran to Azerbaijan. According to the head of the state, development of cooperation between Azerbaijan and Iran plays a special role in strengthening stability and peace in the region.

Ilham Aliyev noted Baku is satisfied with the position of Iran on the Armenian-Azerbaijani conflict over Nagorno Karabakh.

The Iranian president noted, in his turn, Tehran will always be close to Azerbaijan, вЂ�in good or in bad times’. В"We hope, the hard times are behind for the people of Azerbaijan”, Mahmud Ahmadinejat said.

Leadership of Azerigas intends to start the implementation of the second stage of the project from 2006. In compliance with the feasibility study of the project 144bn manats is required to carry out the project. At present the talks for definition of the source of financing are underway.

Along with gas supply of Nakhchivan the government attaches great importance to resolution of problems linked with the energy supply.

During the visit the President also attended the opening of the Heydar Aliyev water reservoir. Vaykhir Hydro-power station (HPS) named after Heydar Aliyev with the capacity of 4.5 MW will be put in to exploitation in 2006. Yasin Safarov, the chief of the Energy Department of Nakhchivan Autonomous Republic (NAR), said the construction work with the estimated budget of $5.8m is expected to complete in 3-4 months. The project is implemented by Turkish companies Cengiz and Cennet, which have relevant agreements with the Cabinet of Ministers of the NAR. The Cabinet of Ministers is to finance 40% of the construction of the HPS with the budget of $5.8m.

The work on preparation for gas admission at the Babak power station is under completion, the Azerenerji JSC told Trend. “The construction and assembling has been carried out by 80%,”Yasin Safarov, the head of the Energy Department of the Nakhchivan Autonomous Republic (AR), said. All necessary equipment was delivered to the country.

The power station will produce 50 MW that allow improvement of energy supply of the Nakhchivan AR suffered difficulties in power supply due to the Armenian blockade.

At present Italian company FIAT carries out work on transition of turbines from diesel fuel to gas system. Work over the reconstruction of the said power station is nearing to completion. The construction and assembly operation are complete 80%. In May 2006 all 4 aggregates will enter a working regime.

In 2006 it is planned to build 10 module power stations in Nakhchivan, which would ensure delivery of additional 90 MW of electricity. The project is implemented jointly wit the Finnish company Warstila. The volume of electricity which will be generated in Nakhchivan in 2006 will reach 140-150 MW. Today NAR covers its major need for energy through import of electricity from Iran and Turkey. In January to November over 1.02 million KW of electricity was delivered to NAR’s energy system.

At present �Araz’ is an only hydro power station, which has generated 84.2 million kW/h energy in this period.

In November the over 112 kW/h electricity was supplied to the NAR. In this period energy delivery fro Iran to NAR made up 70.7 million kW/h and from Turkey вЂ" 36.1 million kW /h. In November Araz Hydro Power Station generated 5.9 million kW/h of electricity.