The extremely rare method of transporting nuclear fuel by plane was adopted for this $13m shipment because there is no rail line linking Russia to Armenia. But the fact that it was not transported by trucks instead could be an indication of Russia’s intent to force Armenia to make good on the debt from the Armenian nuclear power plant—which is now under the control of Russia’s United Energy Systems, or UES—as soon as possible.

The European Union is on record as saying that the plant is one of the most dangerous of those nuclear power plants, or NPPs, that still operate in Europe, and it has tried to entice Armenia with various methods—from encouraging gas pipelines from Iran, to outright financial compensation—to get the former Soviet Republic to shut the plant down.

The Armenian NPP’s only functioning reactor unit—unit No. 2—was shut down after it ran out of fuel on April 4th, after producing 2282 million kilowatt-hours last year. Russian suppliers at first were unwilling to carry out a new fuel shipment because the Armenian NPP’s debt to UES for fuel has come to about $40m. However, Russia decided later that it was more profitable to keep the plant running and sell its electricity to cover the debt. Fuel loading will begin in about a month.

UES’ Involvement as Debt Collector
As a method of bringing the Armenian NPP’s debt under control, Armenia, in March of 2003, handed over the plant’s financial management to Russia. Under this scheme, Armenia retains ownership of the plant, but Russia manages its financial resources and income. The controlling interest of Armenian NPP—which became a joint venture company between Armenia and Russia—is owned by UES.

In order to make this fuel shipment possible, Armenia had to hand over the Sevan and Radzan resevoir systems—which comprise six hydroelectric power plants valued at $25m—to Nordig, a subsidiary of UES. These hydroelectric plants are in need of repair investments of about $30m, according to the news web site Iran.Ru, which cited the US consulting company Hagler Bailly.

The remaining $15m of Armenian debt to Russia is to be paid back in two years by selling electricity within Armenia generated by the Armenian NPP.

The Armenian NPP
The Armenian NPP—also known as Medzamor—is located near the Turkish border and 28 kilometres west of the Armenia’s capital, Yerevan. It has two first-generation VVER-440/270 reactors—seismically improved versions of the VVER-440/230s—that were put into operation in 1976 and 1979.

In October of 1982 the Armenian NPP suffered a serious explosion in the generator of the first reactor unit. The powerhouse hall was burned to the ground.

The plant was built in a seismically active area, but supposedly designed to withstand earthquakes measuring as high as nine points on the Richter Scale. This premise was tested in December of 1988 during the disastrous earthquake near the Armenian city of Spitak, which measured seven to eight points on the Richter Scale. Even though engineers claimed it could withstand such jolts, the plant nonetheless was shut down and partially discharged of its fuel early in 1989. Fear of future earthquakes and potential harm to the plant, rather than any apparent damage suffered during the 1988 earthquake, motivated the shutdown.

But in 1995 the plant was restarted because of Armenia’s severe energy shortage.

Russian-Armenian Nuclear Ties Renewed
Economic cooperation between Armenia and Russia restarted the plant. In January 1995, Russia’s State Duma ratified an agreement to extend a credit line to Armenia to resurrect the Armenian NPP. The credit line was earmarked for Russian technical expertise, fuel and equipment.

The European Bank for Reconstruction and Development helped finance the reactivating of the plant in 1995—but on the strict condition that the plant would be shut down for good by 2004.

The sternest advocate of the plant closure is Armenia’s neighbour, Azerbaijan. A spokesman for Azerbaijan’s president, Novruz Mamedov, was recently quoted by Arminfo news agency as saying that the plant’s equipment is outdated and its future use poses a threat to the whole region.

In an interview with Bellona Web, Antonia Wenisch of Vienna’s environmental Oekologie Institut said that the Armenian NPP and the Bulgarian Kozlodui NPP are the two most dangerous nuclear power plants for the European region’s environment. In a recent report, Wenisch said her institute gave both plants a danger level of 13, on a scale where 15 presents the worst possible danger.

But Yevgeny Velikhov, the president of the famed Russian nuclear research centre, the Kurchatov Institute, said, according to the web site Nuclear.Ru—which serves as a mouthpiece for the Russian nuclear industry—that the Armenian NPP can be reconstructed to work safely in a short period of time.

Gagik Markosyan, director of the Armenian NPP, said in an interview with the Armenian Business Express newspaper that the plant can continue to operate until 2017, and the planned closure is not due to “a technical problem, but a political one.”

Armenia’s Reactors Based on Aging Russian Designs
In Russia, reactors similar to the Armenian ones are used at the Kola and Novovoronezh NPPs. When money for safety of these plants was allocated from the G-8 Nuclear Safety Account—which preceded the famous billion-dollar pledges at the Kananaskis G-8 Summit—Russia promised to perform necessary safety upgrades and subsequently shut down some of the plants’ reactor units when they reached the end of their predicted work cycles. For Novovoronezh that meant reactor bloc No.3 was to close in 2001, and its bloc No.4 in 2002. The Kola NPP’s bloc No.1 was slated to shut down in 2003.

However, Russia’s Ministry of Atomic Energy, or Minatom, has since reneged on that promise to the G-8 and said that all of these reactors will continue to churn out power for another 10 to 15 years each.

But the situation is even worse with Russia’s Leningrad NPP’s bloc No.1, a Chernobyl style RBMK-1000—located a mere 80 kilometres west of St. Petersburg‘s 5 million residents—which will complete its predicted 30-year term of service this year. However, Minatom has suggested extending its term of service for another 15 years as well.

Accordingly, all of these aging reactors are currently in operation.

Europe’s Position
On June 4th, a European Commission, or EC, spokesman, Hugues Mingarelli, said in Yerevan that the European Union will give €100m ($117m) to Armenia if it closes its nuclear power plant. Mingarelli is the head of the EC’s External Relations Directorate for Eastern Europe, the Caucasus and Central Asian Republics.

Mingarelli was quoted by Armenpress news agency as suggesting that importing natural gas from Iran could compensate for the loss of energy that would be caused by the closure of the Armenian NPP. Yet he said that no agreement has yet been reached on EU funding to build an Iran-Armenia pipeline to transport the gas.

But even the pipeline might not provide enough energy.

According to the French firm Sofreco, Armenia’s need for gas imports over the next 20 years is predicted to increase four times—independent of the reactor shutdown—and the country will need annual shipments of 5.6 billion cubic meters of gas, reported the Turkmenistan.Ru news web site. However, Sofreco said, if the Armenian NPP is shut down, the country will need 6.2 billion cubic meters of gas. Today the country only uses 1.5 billion cubic meters of natural gas a year, buying it from Russia’s Itera group of companies, which costs its budget $55 per 1000 cubic meters.

At the same time, Armenia plans to sell electricity to Iran, and that, coupled with the possible oil pipeline, brings the Armenian government into closer political contact with—and possible dependence on—Tehran’s controversial regime.

Yerevan and Tehran have signed a contract to lay a $10m power line so that Armenia can export electricity to Iran. According to the agreements between the two governments, the line should be finished by the end of 2003, but Armenian officials say it will be ready ahead of schedule, in September. The cost of building the line was covered by Iran, and Iran will reimburse this sum by exporting $10m worth of electricity to Iran free of charge.

Isidro Lopez-Arcos, principal administrator for the EC’s Directorate General of External Relations, told Bellona Web in an interview on Thursday that the closure of the Armenian NPP is a topic ”being discussed between the EU and the Armenian government, and the plant will be closed as soon as there will be reliable energy sources to compensate for the plant.”

“There are a lot of considerations, and we consider the Iranian gas pipeline as one of the possible sources, but it should be first studied and discussed with the Armenian government,” said Lopez-Arcos.

The EU has been lobbying Armenia to close the nuclear power station by 2004, but according to Lopez-Arcos, it is now impossible to fix an exact date for the plant’s shutdown. Though Lopez-Arcos did not refer to the situation with Russia’s UES, it could be that Russia’s zeal to collect its debt from the Armenian NPP, as well as sell its energy, is tripping up the deadlines.

In spite of the EU appeals, the Armenian government plans to extend the operation of the plant for another 10 years, the power plant’s director Markosyan was quoted by the Armenian Business Express newspaper as saying. According to Markosyan, the plant is theoretically capable of producing up to 40 percent of the country’s electricity supply. According to Armenian officials, the plant cannot be shut down until an alternative energy source has been found.

Lopez-Arcos said that preliminary studies of alternative energy sources for Armenia are now being conducted by subcontractors for the EC, which are funded through the TACIS programme. Lopez-Arcos noted, however, that the work of the two subcontractors—the Italian company Società Gestione Impianti Nucleari, or SOGIN, and the Scandinavian firm Carl Bro—are still “as yet in a draft state.”

Lopez-Arcos told Bellona Web that when the studies are completed their results will be discussed between the EU and the Armenian government.