Armenia’s strained relations with Russia, its traditional strategic ally, may impact the country’s energy security as Moscow supplies most of its gas needs. Armenia is considered a self-sufficient country in terms of electricity volume, generating up to 98% of its needs in-country.
However, experts warn that over 70% of Armenia’s electricity depends on the countries from which it imports gas and uranium. In 2021, thermal power produced 42.9% of the country’s electricity, while 25.4% was provided by nuclear plants with uranium imported from Russia. Armenia’s electricity is primarily sourced from natural gas and oil, primarily from Russia, with internal resources accounting for 31.6% of its energy needs.
Russia supplies 87.5% of Armenia’s gas needs via pipeline through Georgia, while Iran covers 12.5% through a barter agreement. Armenia also trades electricity with Georgia, though volumes are low due to unsynchronized networks. Iran’s newly appointed ambassador to Armenia, Mehdi Sobhani, hinted that Tehran might help reduce Armenia’s energy dependence on Russia.
In 2021, natural gas accounted for 76.2% of imported energy resources in Armenia, while oil products accounted for 21.9%. Energy expert Armen Manvelyan emphasized the problematic dependency on Russian gas, stating that Armenia’s nuclear and thermal power plants rely on Russian energy resources, and if prices increase, Armenia may face serious problems. The widening rift between Yerevan and Moscow could lead to a spike in prices.
Manvelyan argued that existing tariffs were determined by the quality of political relations between the two countries. However, some experts believe that the problems associated with dependence on Russian gas are not as acute and existing issues can be mitigated by diversifying the country’s energy system, such as developing nuclear and solar energy. Supplies from Russia and Iran are mutually beneficial, with Armenia paying Russian gas at a low price of 175 dollars per 1,000 cubic metre.
Manvelyan emphasized Armenia’s need to ensure good relations with Russia and avoid increasing gas prices, as it could trigger a chain reaction across the country’s economy, affecting export opportunities and making products uncompetitive.
Armenia’s government is implementing reforms in the energy sector to boost its electricity export capacity and diversify sources. The gradual liberalisation of the electricity market, which began in 2022, has opened up new opportunities and created favorable conditions for interstate trade. Prime Minister Nikol Pashinyan believes that the open market model allows consumers to choose an electricity supplier based on offered tariffs, and that the Electric Networks of Armenia (ENA) no longer has a monopoly over the electricity supply.
In the first six months of 2023, 13.1% of consumers chose new electricity suppliers, up from 5.3% in 2022. The government forecasts this share to reach 23% in 2024. The reform facilitated interstate imports and exports, with Armenia exporting 365 million kWh to Georgia in 2022, while Iran remained the primary recipient of Armenia’s electricity.
However, experts remain divided over the benefits of liberalization. Avetisyan’s assessment is positive as it provides opportunities for free competition for existing market players both within the country and abroad. Manvelyan maintains that authorities should have strengthened state control rather than open the market, as energy is one of the few industries that should be very seriously controlled by the state. He believes that Armenia should focus on strengthening state control rather than opening the market.
