Georgia tempted by Iran-Armenia gas project

"We are interested in the project to construct an Iran-Armenia pipeline. However ... the pipeline being built has a smaller diameter than was expected at 700 mm," said a dipilomat.

If constructed, the pipeline would not be enough even for Armenia, he said, adding that both Georgia and Armenia would benefit from transit using a pipeline of larger diameter.

According to RIA Novosti, the agreement to build the 141-km pipeline was signed in May 2004, and will cost an estimated $210-220 mln, including $120 mln for the Armenian section. Construction started in Armenia November 30, and the project is to be finished by January 2007.

Under the agreement, Iran will supply Armenia with 36 bln cubic meters of natural gas over 20 years, with an option to extend the contract for five years and increase total supplies to 47 bln cu m. The natural gas will be used for electricity generation for Armenia's domestic needs and for export to Iran.