Georgia-Gazprom Deal Signed

Surprise News to Rebound on the Government

Russian energy giant Gazprom informed on July 21 through its !
web site that an agreement on strategic cooperation for 25 years was reached with Georgia on July 1.

According to Gazprom, Georgia’s Energy Minister David Mirtskhulava signed an agreement which foresees supply of natural gas to the Georgian customers, rehabilitation of the gas pipelines, use of the Georgian infrastructure for transit purposes and use of gas for electricity production which would be jointly sold by Georgia and Gazprom.

By the fall 2003 Georgian side will have to present the proposals regarding the creation of the joint ventures in the energy system. According to the agreement by that time Georgian government has also to inform the company regarding the plans on privatization of the gas distribution systems in Georgia.

There were no comments from the Georgian government on this issue since July 1. The news of an agreement first broke in the national media yesterday, July 24. David Mirtskhulava refrained from extensive comment telling the j!
ournalists only “it’s not an agreement; it’s just a protocol,!
which does not contradicts Georgian strategic interests.”

In May, 2003 Gazprom’s chief executive Alexei Miller and Georgian President Eduard Shevardnadze reached a handshake agreement in Tbilisi over the strategic cooperation. Fears have been expressed by the Georgian opposition and independent experts, that Gazprom will attempt to take over Georgia’s energy infrastructure, and would thus endanger US-inspired Shah-Deniz project, which is to carry Azeri gas to the Turkish and western markets via Georgia.

Following the visit of the Gazprom chief executive to Tbilisi in May, the US President’s Senior Adviser for Caspian Energy Issues Stephen Mann arrived to Georgia on a two-day visit on June 5-6 to convince the Georgina authorities to avoid any step that might hinder Shah-Deniz.

The US official named two major points claiming the US-led energy project’s superiority over the GazProm’s deal. “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 after the meeting with President Shevardnadze.

The news on signing an agreement came as a surprise even for the Parliamentary Committee for Economy. “I have talked with David Mirtskhulava [Energy Minister] regarding the issue for several times and he personally ensured me that no agreement with the Russian company would be signed. That is why I am not sure that the agreement was really signed. Maybe it is just a protocol on cooperation, as the Minister said,” Chairman of the Committee Demur Giorkhelidze told Civil Georgia on July 25.

“Of course, there is no doubt that the entrance of the Russian company in the Georgian energy system will have extremely negative impact on our strategic interests and security,” he added.

Giorkhelidze says that according to the !
Parliament’s decree the government is obliged to inform the P!
arliament regarding the deals that concerns country’s strategic interests one month before signing the agreement. “The government has not informed the Parliament so far,” he added.

The opposition parties have already demanded impeachment of the Energy Minister. “If the strategic agreement with the Gazprom is signed Mirtskhulava should resign. He must explain who held talks with the Gazprom and who ordered him to sign the agreement,” Davit Gamkrelidze, leader of the New Rights party said at the briefing July 25.

Zurab Zhvania, leader of the United Democrats said on July 25 the government’s backstage deal that concerns the Georgia’s strategic interests “is inadmissible.” “If the Parliament discusses Mirtskhulava’s impeachment, we would support it,” he added.

At the moment another Russian energy giant Itera is the only supplier of gas in Georgia. Observers say the monopoly of Russian gas in Georgia is a powerful political leverage for Russia against!
Georgia and entrance of GazProm would further increase the Georgia’s dependence on Moscow.

The government, and President Shevardnadze are bound to expect serious criticisms if the news on signing the deal with Gazprom are confirmed. For the government, this news could not come at a worst time. Its fate is already hanging by a thin thread due to its inability to meet the budgetary targets. In addition, the rumors of a takeover of the US Company AES-Telasi in Tbilisi electricity distribution network by the Russian power giant Unified Electricity Systems of Russia start to gain some credibility.

Under these circumstances, opposition would find it easy to accuse Shevardnadze and his government of masterminding as massive sellout of the Georgian assets on the eve of Parliamentary elections.

By Giorgi Sepashvili, Civil Georgia

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