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Sun 18 Mar 2007 02:51 PM

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Iran, Armenia to open new gas pipeline

Neighbours will inaugurate the new pipeline on Monday.

Iran and Armenia will inaugurate a new gas pipeline between the two neighbours on Monday, the web site of Iran's oil ministry said on Saturday.

The move is part of Tehran's strategy to add new export markets.

Iran plans to deliver 1.1 billion cubic metres of natural gas to Armenia this year through the pipeline, the volume rising to 1.5 billion in 2013 and 2.3 billion in 2026, the ministry said, quoting the country's Natural Gas Company.

The deal was initially approved by Iran and Armenia over a decade ago but was not finalised until 2004 because the issue of financing the $200 million pipeline to Armenia was stalled.

Armenia's gas and power markets are dominated by Russian firms.

Armenia is due to pay for the gas by exporting electricity to Iran, which is currently embroiled in a dispute with the West over its nuclear programme.

Iran has the world's second largest gas reserves after Russia.

"It is expected that in 20 years a total amount of 36 billion cubic metres of natural gas will be exported to Armenia and it is possible that this amount reaches 47 billion cubic metres," the ministry's web site said.

The 141-km (88 mile) long pipeline cost $210-220 million to build, it said, adding Armenia contributed $120 million. The two countries' presidents will attend Monday's ceremony at the border.

Iran exports only modest volumes of gas, mainly to neighbouring Turkey, which has said gas imports from Iran are overpriced, of low quality and subject to disruptions.

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