Shah-Deniz Gas Increases Georgia’s Hopes for Energy Independence
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| Presidents of GIOC (right) and SCPC signed agreement. |
Britain’s BP, Norway’s Statoil, France’s TotalFinaElf and the Azerbaijan state oil company approved in late-February a $ 3.2 bn project to build a natural gas pipeline from the Caspian Sea to Turkey. The project, named South Caucasian Pipeline Company, is due to start transporting an estimated 8.4 bn cm of natural gas per year in 2006.
The pipeline would run from the Shah Deniz Field through Baku and the Georgian capital of Tbilisi to Erzurum in Turkey alongside the planned Baku-Tbilisi-Ceyhan (BTC) oil pipeline.
“This is a historical day for Georgia as we can really speak about the energetic independence of the country after the project is implemented,” Giorgi Chanturia, the President of GIOC said after the signing ceremony on October 30.
“The Shah-Deniz and the Baku-Tbilisi-Ceyhan projects are not important only for Georgia. It is important for Azerbaijan, Turkey and a number of European countries, which show great interest in implementation of these projects,” Georgian President Shevardnadze said, who attended the signing of the agreement.
Under the agreement, the investors will secure duly supplies of natural gas to Georgia. After construction of the Baku-Tbilisi-Erzurum gas pipeline, Georgia will receive 5 % of natural gas, transported from Azerbaijan to Turkey, as a transit country.
Moreover, Georgia will purchase additional amount of gas at a reduced price – USD 55 per thousand cubic meters within 20 years. Currently Georgia purchases gas from Russia, which is the only supplier of gas to Georgia, at USD 60 per thousand cubic meters.
The experts say that the implementation of the Shah-Deniz project would reduce Georgia energy dependence on the Russian companies.
“I would like to bring one example – last year Georgia consumed 900 million cubic meters of gas that is not enough for the country. Under the agreement [singed between the SCPC GIOC], we will receive 800m cubic meters charge free, and another 500m – at a reduced price. So, we can sell extra 300m cubic meters,” Alexander Tvalchrelidze, expert for energy issues, told Civil Georgia.
“We know that currently Georgia receives natural gas from Russia. By import of Azerbaijani gas, prices will be reduced. We are ready to discuss this issue, however the prices will be regulated by the market and this will be more favorable,” President of the State Oil Company of Azerbaijan (SOCAR) Natig Aliyev said.
“We have a chance to speak about purchasing gas at low prices. Import of Azerbaijani gas gives a chance for competition. This is rather important. Russia will supply gas to Georgia again, while additional amount of gas from Azerbaijan will help Georgia return to the Soviet period, when entire Georgia was gasified,” Shevardnadze stated.
Fears over the implementation of the US-backed Shah-Deniz project increased in August, when Georgia signed agreement with the Russian energy giant Gazprom on strategic cooperation. The United States expressed concern that the Russian takeover of the Georgian energy market could hamper Shah-Deniz project.
Following the deal with Gazprom, the U.S. President’s Advisor for Caspian Energy Issues Stephan Mann arrived to Tbilisi. After his meeting with President Shevardnadze, he was convinced that nothing threatened the implementation of the Shah-Deniz project.
“I am confident, that the Georgian authorities will not do anything to pose a threat to the implementation of such important projects,” Stephan Mann said during his visit to Tbilisi.
On October 30 Georgian President reiterated that Georgia will meet its commitments and will not hinder implementation of the Shah-Deniz project. “I am sure nothing will threaten the project even after expiration of my presidential term [in 2005]. This is my dream,” President Shevardnadze said.
Georgian Ministry for Environment and Natural Resources claims that the Shah-Deniz project poses no threat to region’s fragile ecology.
“We have thoroughly studied the project and its implementation does not pose any ecological danger. The oil pipeline project [BTC] is much dangerous, though the security norms are observed in this case as well. Thus, the Ministry supports the implementation of the gas pipeline project,” Minister of the Environment and Natural Resources Nino Chkhobadze told Civil Georgia.
At the official ceremony of signing of the agreement Eduard Shevardnadze thanked Giorgi Chanturia, the President of GIOC, for his “efforts to implement the Shah-Deniz project.” “I will award Gia Chanturia by all means, but not yet. I will award him only after my presidential term expires,” Shevardnadze said.