Epress.am News from Armenia
A memorandum of understanding between Armenia’s Ministry of Energy and Natural Resources and the Isle of Man-registered International Minerals & Mines Ltd. is paving the way for the exploration of Armenia’s shale reserves. Should large-scale commercial extraction proceed, Armenia’s energy find could grant the landlocked Caucasus nation a measure of energy independence and, with it, newfound geopolitical freedom, reports the World Politics Review.
The Aug. 3 deal comes on the heels of another agreement between the Energy Ministry and the US State Department in June to cooperate in energy exploration, commercialization and investment. This agreement plans “cooperative assessment and technical studies of Armenia’s energy resources, including any potential shale gas resources.” According to the Armenian energy ministry, the August agreement is the result of an international shale gas conference sponsored by the US government, which has offered exploration grants to Armenia and other countries.
Previous assessments suggest Armenia’s hydrocarbon reserves are small. The US Geological Survey, which is identified in the June memorandum as a technical partner in the joint effort, identified 44 million tons of in-place shale oil reserves in the Aramus region based on a 1994 study (.pdf). The Armenian government, however, raised the figure in a 2005 report (.pdf), listing 17 million to 18 million tons of shale oil reserves in Ijevan, Shamut and Jermanis and 128 million tons in Dilijan.
Armenia’s brightening shale estimates coincide with rising expectations for unconventional hydrocarbon sources in Europe. According to a May report from the European Center for Energy and Resource Security, unconventional sources “might be able to cover European gas demand for at least another 60 years.” With the high price of conventional fossil fuels, more-aggressive exploration efforts and improved extraction techniques, shale and other unconventional sources have become increasingly economically viable.
The report also stresses how new European energy sources could reduce the continent’s dependence on imports, specifically from Russia. That parallels the situation confronting Armenia, which is heavily dependent on imported energy from Russia. The vast majority of Armenia’s natural gas comes from a Gazprom pipeline through Georgia from the north, and it is estimated that Russia controls nearly 80 percent of Armenia’s energy system.
Shale exploration, on the other hand, presents Yerevan with the opportunity to further develop an independent energy capacity that would simultaneously reduce its reliance on foreign energy and limits its ties to a revanchist regional power. The US, due to its longstanding interests in the South Caucasus and significant Armenian diaspora population, has long been committed to Armenia’s economic development and its gradual entrance into the Euro-Atlantic system. By backing shale development, Washington furthers both of these goals.
With increased prosperity and reduced foreign dependence, Yerevan should be able to craft a more independent foreign policy. Such a turn of events could help to shake up regional dynamics enough to propel normalization talks with Turkey, reduce tensions over Nagorno-Karabakh and spur on domestic reforms. While energy wealth has historically carried few guarantees, increased energy independence could put Armenia in a better position to choose its friends and partners based on their broader merits, rather than purely on their ability to ensure the country’s basic economic survival.
Increased domestic sources of energy could also help offset an ongoing rise in natural gas prices — a major source of social discontent — while spurring additional economic activity.
Armenian energy independence is by no means around the corner, and it’s still an open question what impact shale exploitation will have on Armenia’s geopolitical trajectory. Exploration may find existing reserves too small or too impure to be commercially viable, much less able to remake Yerevan’s foreign policy. But for the moment, the prospect of domestic hydrocarbon resources offers a tantalizing glimpse into a possible future where Armenia is free to go its own way.
Photo of shale gas rig from Wikimedia Commons by user Meredith.
