Armenian agriculture
Armenian agriculture plays a significant role in the country's economy, with nearly half of the population engaged in small-scale farming. Situated in the southern Caucasus Mountains, Armenia's agricultural practices are influenced by its unique geographic location at the crossroads of the Middle East and western Asia. The historical context of Armenia's agricultural sector includes a legacy from its time as part of the Soviet Union, which established an industrial framework that now relies heavily on Russian investment, especially in energy.
The agricultural landscape is shaped by various factors, including the impacts of military conflicts that have hindered economic development and disrupted traditional supply chains. For instance, the closure of rail links with Russia due to regional conflicts has required Armenia to adapt its import strategies for essential resources, impacting agricultural productivity. Additionally, energy security is crucial for supporting agricultural activities, leading to ongoing efforts to diversify energy sources through infrastructure projects like the Iran-Armenia gas pipeline.
Despite these challenges, Armenian agriculture remains resilient, embodying the cultural heritage and economic livelihood of many families. The sector continues to evolve, reflecting the ongoing adaptation to both local and international dynamics, making it a vital area of interest for those seeking to understand Armenia's socio-economic landscape.
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Armenian agriculture
Official Name: Republic of Armenia.
Summary: Armenia does not possess its own hydrocarbon resources and is almost entirely dependent on oil and gas imports from Russia.
Set in the southern Caucasus Mountains at the crossroads of the Middle East and western Asia, landlocked Armenia is bordered by Turkey, Iran, Azerbaijan, and Georgia. Close to half the population of 3 million is engaged in small-scale agriculture—but a legacy of the nation’s seven decades within the Soviet Union is an industrial sector dominated by Russian investment, ownership, and management, particularly in energy.
Oil and Petroleum Supplies
In Soviet times, Armenia received oil deliveries from Russia by rail via Georgia. Military conflicts, which followed the 1991 dissolution of the Soviet Union, considerably undermined Armenia’s oil demand. The war between Georgia and its breakaway republic of Abkhazia closed Armenia’s direct rail link with Russia, and the Armenian-Azeri military conflict over the Nagorno-Karabakh region resulted in the 1993 economic embargo imposed on Armenia by Turkey and Azerbaijan. Today, Armenia imports oil from Russia by barge via the Black Sea and then by rail through Georgia. Armenia’s current annual demand for petroleum products stands at 400,000 metric tons. In January 2011, Armenia and Iran reached a deal on construction of a 365-kilometer pipeline that would bring refined petroleum products from Tabriz in northeastern Iran to the Armenian border. Starting in 2014, the pipeline (230 millimeters in diameter) is to transport 1.5 million liters of petrol and diesel fuel per day. This project is crucial for Armenia’s energy security in view of the hindered oil deliveries via Georgia during the Russian-Georgian war of 2008.
Gas Supplies
In Soviet times, Armenia imported most of its gas from Turkmenistan in central Asia. However, the political and economic chaos of the 1990s created a situation that often made it difficult for domestic gas consumers, including those in Armenia, to pay for imported gas supplies. The problem of nonpayments was exacerbated by the attempts of Central Asian gas producers to bring gas prices to European price levels. This resulted in further arrears and a halt on gas imports. The subsequent termination of gas supplies to domestic consumers resulted in a rapid deterioration of the gas distribution pipeline network within Armenia.
In 1997, in order to secure reliable gas supplies and to refurbish the domestic gas pipelines, the Armenian government established a joint venture, ArmRosGazprom (ARGP), with two Russian companies, Gazprom and Itera. ARGP’s main task is to import, transport, and distribute Russian gas within Armenia. ARGP subsequently became the sole owner and operator of Armenia’s main gas pipelines, the domestic distribution network, the Abovian gas storage facility (with a capacity of 0.1 billion cubic meters), and the fifth unit of Armenia’s largest thermal plant, in Hrazdan.
By 2008, following further investments required for the Armenian energy sector, Gazprom’s share in ARGP was increased to 72.16 percent, with the Armenian government and Itera retaining 22.78 percent and 5.06 percent, respectively. As a result, today Gazprom controls almost the entire Armenian gas sector. Gazprom supplies gas to Armenia via the North-South Caucasus Pipeline (1,200 millimeters in diameter), which runs through Georgia. Before the global financial crisis that began in 2008, Armenia imported around 2 billion cubic meters of Russian gas per year via this pipeline, with additional 0.2 billion cubic meters of gas supplied to Georgia as a payment in kind for transit fees. By early 2011, Armenian domestic gas consumption declined to 1.44 billion cubic meters per annum. In 2004, in order to diversify gas supply sources, the Armenian government initiated the construction of the Iran-Armenia gas pipeline. The planned pipeline’s diameter of 1,420 millimeters was subsequently reduced to 700 millimeters on Gazprom’s prompting, because of Russian concerns over the potential use of the new route for Iranian gas deliveries to Europe. The current pipeline capacity stands at 1.1 billion cubic meters per year and is projected to increase to 2.3 billion cubic meters by 2019. However, Gazprom, via its subsidiary ARGP, owns the Armenian section of the gas pipeline from Iran, thus controlling potential non-Russian gas deliveries to and via Armenia.
At present, Iranian gas is solely supplied in return for Armenian electricity exports (at the rate of 3 kilowatts per hour for 1 cubic meter of gas) and is not sold to Armenia’s domestic consumers.
Bibliography
Danielyan, Emil. “Armenia Debates Nuclear Energy After Japan Disaster.” Jamestown Foundation Eurasia Daily Monitor, April 11, 2011.
International Energy Agency. “Electricity/Heat in Armenia in 2008.” http://www.iea.org/stats/electricitydata.asp?COUNTRY‗CODE=AM.
Tsurtsumia, Tamar. Gas Transit through Georgia in the Light of Energy Charter and Energy Community Provisions. Energy Charter Secretariat, 2014. International Energy Charter, www.energycharter.org/fileadmin/DocumentsMedia/Other‗Publications/20151218-Gas‗Transit‗through‗Georgia-Energy‗Charter‗‗‗Energy‗Community‗Provisions.pdf. Accessed 6 Sept. 2017.
Yeghiazaryan, Armen. “Natural Gas Markets in Armenia.” In Russian and CIS Gas Markets and Their Impact on Europe, edited by Simon Pirani. New York: Oxford University Press, 2009.