Armenia’s Energy Security, And The Future Of The Armenian Nuclear Prog

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Issue #37 (257), September 14, 2007

(September 14, 2007)

Armenia’s Energy Security, and the Future of the Armenian Nuclear Program

By By Armen Kharazian, Director of Research and Analysis, Armenian Assembly of America

Special to ArmeniaNow

 

Nuclear energy is the backbone of Armenia’s energy security. The Metsamor Nuclear Power Plant accounts for 40-45% of Armenia’s electricity consumption. Its decommissioning, without a viable alternative, will paralyze the national economy, causing a crisis reminiscent of the early 90s.

 

Armenia’s alternatives are limited. Its capacity in hydro, coal and non-conventional power, combined with conservation and improved oversight would only meet a fraction of the existing needs. Armenia’s oil & gas outlook is restricted as well. Access to Caspian energy remains denied, and the limited capacity of the Iran-Armenia gas pipeline, plus geopolitical complexities surrounding that option, make it an inadequate alternative.

 

Thus, Armenia’s energy security is directly dependent on its nuclear program. The remaining eight to nine years are Armenia’s only opportunity to move towards securing the technology, funding, and international support necessary, to build a new nuclear power reactor before the existing one is decommissioned.

 

Armenia has on numerous occasions expressed its intention to seek international assistance for a new power reactor. In July 2005 it requested an IAEA (International Atomic Energy Agency) feasibility study to that effect, which the Agency has supported. In fact, one year earlier the IAEA had endorsed a strong connection between Armenia’s energy independence, and its future nuclear program beginning in 2016.

 

Armenia has earned a very good reputation within the IAEA for compliance, safety, and responsible management. It is also a signatory to the Protocol Additional to the IAEA Nuclear Safeguards Agreement under the Non-Proliferation Treaty. This is the primary instrument for advanced verification of a member state’s compliance with standards of peaceful use. Therefore, Armenia should face no expertise-, industry-, or compliance-related obstacles to qualify for assistance for a new nuclear reactor. Nonetheless, the potential opposition of certain member states, and the regional situation, including the Nagorno Karabakh conflict, might impede efforts to secure sources of international funding. However, U.S. support for a new nuclear reactor would enhance Armenia’s credentials, and break ground for necessary international assistance.

 

There have been discussions between U.S. and Armenian energy authorities regarding Armenia’s energy security, including nuclear energy for some time now, most actively in the past two years. The U.S. government, despite having expressed reservations on the nuclear element, has been generally supportive of Armenia’s quest for energy security, and has not excluded potential assistance in the nuclear energy area in the future. This suggests that U.S. nuclear development assistance for Armenia is well within the realm of possibility, and there is reason to believe that with serious, professional advocacy, results can be achieved.

 

Of course there are uncertainties regarding Armenia’s freedom of choice in energy partners – a limitation that might complicate the process. Armenia’s energy strategy is geared toward Russia, whose interests may not be indifferent to U.S. involvement in large energy projects with Yerevan. Given that much of Armenia’s energy sector, including the Metsamor NPP, is under full or partial Russian control, Russian collaboration would be needed, to make progress on any new nuclear project. However, the potential for collaboration between Russia and the United States does exist. It is rooted in a joint statement by Presidents Bush and Putin on Cooperation in Peaceful Uses of Nuclear Energy and Countering Nuclear Proliferation, released on July 17, 2006, on the eve of the G-8 Summit in St. Petersburg. The Statement sets forth an agreed framework for three-tier cooperation involving the U.S. and Russia, four other nations of the Nuclear Suppliers Group, and the IAEA, to extend nuclear energy development models to interested nations. It also ensures minimum risk of pursuit of uranium enrichment and spent fuel processing for any possible weapons production. The Statement further acknowledges the essential role of nuclear energy in energy security, and directs both U.S. and Russian Governments to begin negotiations toward an agreement on cooperation in the peaceful use of nuclear energy.

 

The raison d’être of the joint statement is the shared U.S., Russian and international concern regarding the Iranian nuclear program. However, its broader framework is the growing understanding among nuclear powers that stricter non-proliferation is effective when complemented by legitimate mechanisms for access to peaceful nuclear energy development.

 

If the Bush-Putin statement does eventually lead to an implemental Agreement, it would establish sufficient grounds for any potential U.S.-Russian collaboration on the question of Armenia’s nuclear energy program. This joint framework, however, would address only concerns regarding technology, safety, and non-proliferation, but not the question of funding.

 

The Armenian Government has outlined its understanding of the financial aspects of the new nuclear reactor construction. It foresees a cost ranging from anywhere between $600 million and $2 billion, depending on a number of factors, primarily reactor design and capacity. The Armenian Government has also initiated amendments to the national energy legislation, with a view to allow private investments in, and ownership of the country’s nuclear energy infrastructure, in order to attract potential foreign and domestic sources of funding.

 

Nuclear energy is a matter of necessity for Armenia, not a choice. Over the next two decades energy security will be the determining factor of national competitiveness in the South Caucasus. It will directly impact the future of all three states in the region and the protracted strategic competition for resources, opportunities and success in nation-building.

 

Helping Armenia succeed in nation-building must become a core objective of the organized Armenian-American advocacy community. Given the importance of nuclear energy to Armenia’s energy security, and the impact that America’s support could make on that effort, Armenian-American advocacy has a vital role to play in shaping and leveraging support from both the U.S. Government and the private sector, in the form of regulatory policy, legislation, and funding, to help Armenia achieve energy security.

 

In the early 90s, when Caspian development was in the planning stage, Armenia was confronted with a choice – Karabakh or a share in Caspian Energy. Armenia rejected the notion of choice, reasserting the primacy of Karabakh. Armenia’s next challenge for the coming decade is to successfully claim the “other end” of the independence equation – energy. Armenia’s road to it lies through nuclear energy. It is its best response to the challenges posed by Azerbaijan’s rich Caspian oil resources.