With Shah-Deniz Major Gas Supplier, Georgia Also Needs other Sources

President Saakashvili said on December 21 that Georgia will receive most of its gas from Azerbaijani’s Shah-Deniz field in 2007, but added that the country should maintain other sources as well.

President Saakashvili, who was speaking with Georgian reporters after meeting with Turkish Prime Minister Recep Tayyip Erdogan in Istanbul, said that he is optimistic about the country’s gas supplies after talks with Turkish leaders.

But he also added, without further elaboration, that “many technical details” still remain to be agreed on.

Georgian Prime Minister Zurab Nogaideli is expected to visit Baku for additional talks to finally agree on redistribution terms of gas quotas from the Shah-Deniz field.

Azerbaijan, Turkey and Georgia have recently been in intensive talks about the redistribution of Turkey’s gas share – 2,8 billion cubic meters – from the Shah-Deniz field. Although Turkey agreed to give up 800 million cubic meters of gas from its share in favor of Georgia, the terms on how Georgia will compensate Turkey remain unclear.

Georgian Energy Minister Nika Gilauri said on December 20 that details of the terms were expected to be agreed on after talks with the Turkish PM.

President Saakashvili also said that although Shah-Deniz will be “major” and “strategic source” of Georgia’s gas supply, the country should “maintain other sources as well.”

Saakashvili did not specify the price that Georgia will pay for the Shah-Deniz gas, but said that the “price of gas on the world market is increasing” and added that the Georgian government will spare no efforts to make the “transition” less painful for Georgian households.

President Saakashvili said that Georgia should have other sources of supplies apart from Shah-Deniz, which could mean that Georgia will buy some of its gas from Russia as well. The option to purchase Iranian gas also does not seem to be totally ruled out yet. Georgian PM Zurab Nogaideli, who plans to visit Tehran by the end of this month, said recently that teh Iranian option will depend on the final agreement over Shah-Deniz gas.

The Shah-Deniz price is expected to be less than the one offered for Russian gas. Gazprom spokesman Sergey Kuprianov said on December 20 that the Russian monopoly will charge Georgia USD 235 per 1000 cubic meters in 2007 if Tbilisi signs an agreement.

If a final agreement is reached Georgia hopes to have at least 1,05 billion cubic meters of gas next year from Shah-Deniz – 800 million cubic meters from the Turkish share and 250 cubic meters which was Georgia’s share in accordance to the initial contract. Reports say that Georgia will also have at least 100 million cubic meters of gas from Gazprom as a fee for transiting Russian gas to Armenia.

1,15 billion cubic meters of gas will be more than enough to supply households in Georgia in 2007.

Itera, a company which distributes gas to about 150 thousand households and enterprises in Georgia’s regions, said its customers’ consumed up to 250 million cubic meters of gas in 2006.

KazTransGaz-Tbilisi, the gas distribution company for the capital city, said gas consumption in Tbilisi reached 380 million cubic meters in 2006. The total number of gas consumers in Tbilisi is 266 thousand, including households, public facilities and enterprises.

But the amount of gas consumed by some major enterprises like factories, gas turbine generators and gas-generated power plants, is not included in this gas consumption breakdown.

Saqcementi, a cement producing factory, and power plant number 9 are among the major gas consumer enterprises in Georgia with 250 million and 300 million cubic meters of annual gas consumption, respectively. But Saqcementi has already said that it may switch to coal consumption instead of gas starting from 2007.