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Georgia Negotiates to Buy More Cheap Shah-Deniz Gas
/ 20 Jun.'06 / 22:01
Tea Gularidze, Civil Georgia

With the launching of the South Caucasus Gas Pipeline (SCP) less than five months away, Georgia is now striving to gain the right to purchase more gas from this pipe at a reduced price than is envisaged by the current contract.

Experts from Azerbaijan, Georgia and Turkey gathered in Tbilisi on June 20 to negotiate Georgia’s request on a sideline of the Eurasian Energy Security conference.

Initially it was agreed that after the construction of the SCP – also known as the Baku-Tbilisi-Erzrum, or Shah-Deniz, gas pipeline – Georgia as a transit country will receive 5% of the natural gas transported from Azerbaijan to Turkey. Georgia will also purchase an additional half billion cubic meters of gas per year at a reduced price – USD 55 per 1000 cubic meters (with annual 1,5% price escalation) for the next 20 years. The SCP has an initial capacity to ship 8 billion cubic meters of gas. After 2012, capacity is expected to increase up to 20 billion cubic meters.

Georgia now wants to receive at least 1,5 billion cubic meters of gas at reduced price starting from 2007.

“It is quite real… and our Azeri and Turkish partners are willing to help,” Davit Ingorokva, President of Georgian International Gas Corporation, told Civil Georgia on June 20.

He said that Tbilisi has changed its “approach and policy” towards the issue.

“Georgia has always been perceived as only the transit country, but it has turned into a consumer country as well,” he added.

“We want to purchase additional gas at the price, which will not trigger increase of electricity cost in Georgia so that to prevent problems for the commercial industries in the country,” Ingorokva said.

Officials in Tbilisi are optimistic about the outcome of talks with the Azerbaijani and Turkish sides.

“Among these three states Georgia is the most vulnerable in respect of energy supplies; Turkey and Azerbaijan understand very well our situation and they show readiness to somehow assist,” Ingorokva said.

Georgia’s request to purchase 1,5 billion cubic meters of gas at reduced price is more than half of the country’s forecasted gas consumption.

Georgia consumed up to 1,5 billion cubic meters of gas in 2005 and figure is expected to increase up to 2 billion in 2006.

The 690-km long BP-led SCP is the only real alternative source of energy supply for Georgia, whose increasing gas consumption currently totally depends on Russia. Georgia purchases gas from Russia at the price of USD 110 per 1000 cubic meters.

Speaking at an international conference on Eurasian Energy Security in Tbilisi, co-hosted by the International energy Agency and the Georgian government, President Saakashvili called for an active development of the new energy transit routes.

He stressed importance of development of the Trans-Caspian and Black Sea-bed pipeline projects to ship Central Asian hydrocarbons to the western markets via Caucasus and Ukraine.

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