Government Posed to Yield to the US Pressure on GazProm Deal

Possible entry of Russian energy giant GazProm to the Georgian market concerns the United States, fearing the GazProm deal poses direct threat to the implementation of the US-led Shah-Deniz project, which is to carry Azeri gas to the western markets via Georgia and Turkey.

Following the visit of the GazProm Executive Director Alexei Miller to Georgia, which aimed at discussing the possible entry of the company  to the Georgian market, US President’s Senior Adviser for Caspian Energy Issues Stephen Mann arrived in Georgia on a two-day visit on June 5-6.

“Georgia should do nothing that undercuts powerful promise of East-West energy corridor. So I have encouraged the Georgian government to look at any potential agreement [with GazProm] with very careful eye as to what impact it might have,” Stephen Mann said on June 6 at the news briefing after the talks with Georgian President Eduard Shevardnadze.

He said that these discussions with the Russian energy giant are on the preliminary stages. However, “support for any competing gas export pipelines at this stage would be destructive for Shah-Deniz,” he added.
 
US official named two major points claiming the US-led energy project’s superiority. “Shah-Deniz can supply 15-20 billion cubic meters per-year. This is very large amount. Secondly, GazProm gas going to Turkey now is the most expensive gas on the market. So taking together these are the brilliant arguments for the Shah-Deniz,” Stephen Mann said.

“I do not believe that there are other good proposals, beside Shah-Deniz,” he added.

Due to such a reaction by the American side, the Georgian government seems inclined to change its stance on GazProm, announcing that the country is ready to fulfill its obligations undertaken under the Baku-Tbilisi-Erzerum gas pipeline and the Baku-Tbilisi-Ceyhan oil pipeline projects.

“Georgia should not take any steps, which would trigger the devaluation of these vital projects. It is worth noting, that the expected investment by GazProm in Georgia’s pipelines – USD 200 million at the first stage – is nothing compared to the dividends that the Baku-Tbilisi-Erzerum pipeline would bring to Georgia,” President of the Georgian International Oil Corporation (GIOC) Gia Chanturia said.

He said Georgia’s should fulfill its obligations undertaken under the East-West projects. “Any opposite action will result in Georgia’s financial responsibility [for the failure of these projects],” Chanturia added.

Georgian Parliamentary Chairperson Nino Burjanadze also commented on GazProm’s proposals, saying the government should submit information on this issue for the Parliamentary review. “If a contract is concluded with GazProm, that should not hamper the Shah-Deniz project”, – Burjanadze said at a June 6 meeting with Stephen Mann.

Fears regarding the implementation of the Shah-Deniz project increased after a handshake agreement on May 28 between President Shevardnadze and Alexei Miller, chief executive of GazProm.

The parties decided to sign an agreement on strategic partnership in gas sphere already in a coming month. The agreement is to include joint projects of supply and distribution of gas on the Georgian market as well as transportation of gas through Georgia.

GazProm is ready to rehabilitate two trunk-line gas pipelines, one of which will be used for transportation of gas to Armenia and the other – to Turkey, via Adjara Autonomous Republic.

After the visit of the Russian energy giant’s top executive, Georgian economy experts cast doubts, regarding the possible deal, claiming that the GazProm entry to the Georgian is not profitable for the country.

“Implementation of the Shah-Deniz project is much more profitable for Georgia. It can be proved easily, since the country will have 5% of transited gas free of charge, while the cost of GazProm gas for Georgia is by USD 16 expensive, compared to Armenia. So, everything is clear,” Alexander Tvalchrelidze, economic analyst told Civil Georgia.

Tvalchrelidze believes that the GazProm’s entry to the Georgian market as a geopolitical game, rather than an economic interest.

By Tea Gularidze, Civil Georgia

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