A spokesman for the Gazprom-Neft company, Natalya Vyalkina, told RFE/RL that both the Armenian and Russian governments are looking into the project estimated at a staggering $1.7 billion. She would not say when they could make concrete decisions.

Reports in the Russian press have said President Robert Kocharian discussed the matter with Russian Industry and Energy Minister Viktor Khristenko and other top officials during his confidential visit to Moscow last week. Khristenko's ministry refused to comment on the information. Russian-Armenian cooperation on energy was on the agenda of Kocharian's follow-up talks with Russia's President Vladimir Putin on Wednesday.

The projected refinery would reportedly be built in Meghri, an Armenian town close to the Iranian border, and have the capacity to process up to 7 million tons of Iranian oil each year. Petrol produced by it would be exported to Iran. Despite its vast oil reserves, the Islamic Republic has to import gasoline to meet domestic demand.

Some Russian experts have expressed serious misgivings about the feasibility of the extremely ambitious project, arguing that oil refineries are usually located near sea ports or major oil pipelines. They see political motives behind the idea of creating such a facility in landlocked Armenia.

But one Moscow-based analyst, Oleg Maksimov of the Troika-Dialog consultancy, disagreed. "Today there is a shortage of oil refineries all over the world," he said. "The existing ones are all very profitable, and it is too early to say that the project to build such a plant in Armenia is politically motivated."

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