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    Georgia: No Plans to Import More Russian Gas



Georgian President Mikheil Saakashvili has stated the idea of “considering Russia as a serious alternative for energy supplies means fundamentally reviewing Georgia’s independence.”

by: Molly Corso

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Natural Gas & LNG News, News By Country, , Georgia

Georgia: No Plans to Import More Russian Gas

The Georgian energy ministry has sidestepped claims that it was ready to buy gas from Russia after a seven year hiatus. While analysts maintain having multiple suppliers is a sound policy, purchasing natural gas from Gazprom appears to carry too much political baggage to be worth the cost.

Georgian Energy Minister Kakha Kaladze announced on May 6 that the country should diversity its energy partners, noting that there is still a need for more suppliers – including Russia.

Reaction to his comment, however was swift: Georgian President Mikheil Saakashvili stated the idea of “considering Russia as a serious alternative for energy supplies means fundamentally reviewing Georgia’s independence.”

Tbilisi’s ability to free itself from Russian gas has long been viewed as a major victory for the country and its quest to carve out a future outside of Moscow’s orbit.

Georgia switched to Azerbaijani gas in 2006, after Gazprom increased prices and a series of mysterious blasts halted gas shipments from Russia at the height of one of the country’s coldest winters in memory.

Today, Georgia receives most of its gas from Azerbaijan, both from the Shah Deniz pipeline as in-kind payments for transit, and from SOCAR, the Azerbaijani government energy giant. SOCAR is also heading up gasification in Georgian rural communities.

Reportedly ten percent of the country’s gas needs are met by Russian gas, but the government does not pay for it; the gas is part of Georgia’s transit fee for Moscow to use the country’s North-South Pipeline to ship natural gas to Armenia.

Kaladze appeared motivated to diverse Georgia’s dependency on Azerbaijani energy, not revert to the days before the Shah Deniz pipeline, when Georgia depended on Russia for nearly all of its gas needs.

In a statement on posted on his official facebook page in response to critics, the energy minister underscored that any energy partner would have to offer good deals and good conditions to get Georgia’s business.

“Our government is focused on economic development, people's well-being is our top priority, and therefore cooperation and relationship with all the countries in which it would help us,” his statement read.

“That's why I can say with regard to the import of natural gas that we want to diversify, and if any other country, including Russia, too, of course, offered … terms and conditions and prices of the Azerbaijani gas to enter the market, it is clear that our state will not refuse. At this point I have not made any concrete talks with the Russian side.”

Analysts like Murman Margvelashvili, the director for Energy Studies at World Experience for Georgia, said diversifying energy suppliers is generally a good strategy, assuming “these sources are transparent, that you are paying only what you are paying in money and you increase your energy security with that.”

“The situation now might be better than the situation back in 2004 when we were solely dependent on Russia but at that time the Shah Deniz gas was still not operating,” Margvelashvili noted, adding that the original deal to bring gas to Georgia via the Shah Deniz pipeline was signed under the Shevardnadze government in the late 1990s.

Georgia will receive even more gas from the second stage of Shah Deniz once it goes on line.

He noted, however, that what Georgia really needs is better energy strategy.

“[I]t is not a big issue actually to have two suppliers once you balance your interests… The big question is how well prepared is the ministry to engage in serious negotiations. In absence of energy policy, and I have mentioned this many times on many different occasions, there is a big danger that we will not get the full benefit of potential and may get into agreements that may not be optimal,” Margvelashvili said.

“You don’t build strategic capacity in one month or one year. You need to grow the people, you need to grow the groups, you need to have planning capacity, interaction between politicians and specialists and you need experience…”

Molly Corso