Gazprom Claims to Be Georgia’s Major Gas Supplier in 2007

Russian energy giant Gazprom said on December 22 that it has signed agreements with three companies in Georgia on the supply of a total of 1,1 billion cubic meters of gas in 2007. The statement goes against an announcement made by Georgian Prime Minister Zurab Nogaideli, who told a news conference on the same day in Tbilisi that Georgia will have almost 70% of its gas supplies from Azerbaijan’s Shah-Deniz field.

Chief of the Russian gas monopoly’s export arm Gazexport, Alexander Medvedev, said at a news conference in Moscow that the contracts envisage the purchase of gas by companies in Georgia for USD 235 per 1000 cubic meters.

“The total amount of supply according to these agreements will be 1,1 billion cubic meters, which, if we take into consideration that Georgia’s total consumption is 1,8 billion [cubic meters per year], will be a major part of [Georgia’s gas] supplies,” Medvedev said.

Meanwhile in Tbilisi at a news conference which was held shortly after Gazprom’s announcement, PM Nogaideli claimed that Georgia will have most of its gas imports from Azerbaijani’s Shah-Deniz field – but he also added that Georgia will import some of its gas from Russia as well.

He declined to comment about reports of a Gazprom deal, saying that “approximately 70%” of the gas needed by Georgia will be imported from Shah-Deniz.

Nogaideli said the precise terms and balance of Georgia’s gas imports for the next year will become known only after his talks with Azerbaijani officials next week. PM Nogaideli plans to travel to Baku on December 25.

In Moscow, Medvedev said that Gazexport signed contracts for one year terms with two companies and for a three-month term with KazTransGaz-Tbilisi, a company distributing gas in the Georgian capital.

The two other companies are Saqcementi, a cement producing factory which needs about 250 million cubic meters of gas annually, and the Russian-owned electricity grid Telasi, which needs about 300 million cubic meters of gas annually for its power generator plant number 9 in Gardabani.

The plans of other companies, including Itera, which is a gas distributor in Georgia’s regions, and Energy-Invest, which owns gas turbine generator in Gardabani, are not yet clear.

It seems that KazTransGaz-Tbilisi, gas distributor for the capital, is still hoping to receive relatively cheap Shah-Deniz gas next year. But as Georgian authorities have not yet come to a final agreement with Azerbaijan and Turkey for the redistribution of gas quotas from Shah-Deniz, the company had to sign a short term, three-month long agreement with Gazprom. The move enables KazTransGaz-Tbilisi to secure gas supply for households in Tbilisi even if there is no agreement over Shah-Deniz gas.