PM, Energy Minister in Gas Talks
/ 24 Nov.'06 / 11:35
Civil Georgia

Georgian Prime Minister Zurab Nogaideli said on November 23 that he expects “to have the final picture” about potential gas supplies from Iran in December.

PM Nogaideli’s remarks come after talks with Iranian Vice-President Pervez Dawoodi in Istanbul on the sidelines of the World Economic Forum.

“We are currently negotiating over gas supplies with four countries [Azerbaijan, Iran, Russia and Turkey] and we will choose the best option for us. These are commercial talks, so I would not like to unveil details of the negotiations… We will have gas in January; but it is early to talk about the price and amount of gas,” PM Nogaideli said.

PM Nogaideli, who is accompanied in Istanbul by Georgian Energy Minister Nika Gilauri, has already met with his Turkish counterpart Recep Tayyip Erdogan and Turkish Energy Minister Hilmi Guler.

“We have made a step forward. We hope to have the final deals next month,” Energy Minister Gilauri told reporters, but declined to elaborate.

Georgia’s main hope to ease its current total dependency on Russia’s expensive gas lies with the South Caucasus Gas Pipeline (SCP) project, the Baku-Tbilisi-Erzrum pipeline, which will transport Azeri’s Shah-Deniz gas to Turkey via Georgia.

Georgia is expected to receive 200 million cubic meters of gas as a transit fee, plus 50 million cubic meters at a reduced price – USD 55 per 1000 cubic meters - from the SCP next year. Cuurently, Georgia is desperately trying to purchase more than its allotted 50 million cubic meters of cheap gas from the SCP. To do this Tbilisi has to make deals not only with Azerbaijan, but also with Turkey, both of which are part of the SCP project.
But Turkish and Azeri media sources recently speculated that Azerbaijan will not be able to supply Georgia with additional gas because Baku itself may face a shortage of energy in 2007.

Azerbaijani news agency Trend, quoting Rovnag Abdulayev, President of State Oil Company of Azerbaijan (SOCAR), reported that Russia plans to reduce the gas supply to Azerbaijan to 1,5 billion cubic meters.

On November 22 Georgian television stations broadcasted footage by Azeri TV stations showing Abdulayev speaking in Azerbaijani with reporters. According to the Georgian translation, Abdulayev said that Azerbaijan will have to cover a deficit in gas supplies from Shah-Deniz field. The statement triggered Georgian media to speculate that Baku will no longer be able to supply Georgia with additional gas.

But Energy Minister Nika Gilauri downplayed these concerns.

“Azerbaijan has never said that it will not supply Georgia with gas. These were only media reports,” Gilauri told Georgian reporters in Istanbul on November 23.

Vice-Speaker of the Georgian Parliament Mikheil Machavariani, who has just recently visited Azerbaijan, said on November 24 that Russia is mounting pressure on Azerbaijan.

“Russia is telling Azerbaijan that if this gas [exported by Russia to Azerbaijan] goes to Georgia the price will increase for Azerbaijan as well. But our Azeri colleagues told us that Azerbaijani leadership is keen to help Georgia and they are now looking for ways to solve this problem,” MP Mikheil Machavariani told Rustavi 2 TV.

Georgian PM Nogaideli and Energy Minister Gilauri are expected to travel to Baku in late November to discuss gas supply issues with the Azeri authorities.

Russian energy giant Gazprom said it intends offer gas to Georgia for USD 230 per 1000 cubic meters in 2007, more than double the current price. Gazprom has also offered to sell Tbilisi cheaper gas in exchange for certain pieces of Georgia's gas infrastructure, but Georgia has declined the proposal as “blackmail.”

President Saakashvili said on November 14 that Georgia will not buy Russian gas for USD 230 per 1 000 cubic meters, which, as he put it, is “a political price.”

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