Tbilisi Tries to ‘Soften’ Gas Price Hike, as Gas-Sharing Deal with Turkey Questionable
Russia is to provide at least 80% of Georgia’s gas needs in 2007 at USD 235 per 1000 cubic meters after Gazprom signed a contract with a fourth company in Georgia.
Meanwhile, Georgian Finance Minister Lexo Alexishvili said on December 27 that about GEL 89-90 million will be allocated for the Energy Ministry from the state budget designed as a credit for gas distributor companies in Georgia to provide “soft transformation” into a new increased gas tariffs for households.
Itera, a Russian company distributing gas to consumers in the Georgia’s regions, said on December 27 that it signed an agreement with Gazprom on the purchase of 360 million cubic meters of gas in 2007 for USD 235 per 1000 cubic meters.
The deal comes five days after Gazprom signed similar contracts with three other companies in Georgia on the supply of a total of 1,1 billion cubic meters of gas in 2007.
As a result, Gazprom will supply Georgia with a total of 1,46 billion cubic meters of gas in 2007. Georgia consumed up to 1,9 billion cubic meters of gas in 2006.
Georgian Prime Minister Zurab Nogaideli reiterated at a government session on December 27 that Georgia has failed to receive gas deliveries from the Shah-Deniz field because of technical problems at the drilling wells.
He also stressed that Georgia has already reached a Shah-Deniz gas-sharing agreement with Turkey.
“We have accomplished re-contracting of Shah-Deniz gas shares after talks in Turkey, which is very important for us. In addition we have agreed with Azerbaijan on the delivery of 1 million cubic meters of gas [per day] from the New Year,” PM Nogaideli said.
But Turkish Energy Minister Hilmi Guler denied on December 26 that the agreement has been reached, according to the Turkish media reports.
“We’ll have a tripartite [Azerbaijani-Georgian-Turkish] meeting and then clarify the issue,” the English-language newspaper Turkish Daily News quoted Guler as saying.
As Russia’s expansive gas will be major source for Georgia in 2007, gas tariffs for consumers will increase.
According to some estimates, the price of one cubic meter of gas for households in the capital Tbilisi is expected to increase from the current GEL 0,34 (approximately USD 0,19) up to GEL 0,55 (approximately USD 0,31).
Georgian Parliamentary Chairperson Nino Burjanadze told lawmakers at a session on December 26 that there will be no “swift price hike” on gas for households next year, as the authorities are determined to make the anticipated gas price increase less painful for socially vulnerable people.
Georgian Finance Minister Lexo Alexishvili said on December 27 after the government session that up to GEL 90 million (USD 52,3 million) credit will be allocated for gas distributor companies.
“This fund will be used as a credit for gas supplier companies [in Georgia] which will be needed for making the transformation to a new gas tariff softer,” Lexo Alexishvili told reporters on December 27.
He also said that gas tariff will not be increased for households in January.