Georgia hopeful to solve natural gas supply problems
By M. Alkhazashvili

The Messenger, Georgia
May 3 2005

During his visit last week to Baku and negotiations with Azeri and
Turkish representatives, Georgian Minister of Energy Nika Gilauri
said the Tbilisi government hopes that after the implementation of
the Shah Deniz natural gas pipeline project, Georgia’s demand for
natural gas will be completely satisfied.

BP, the main constructor of the 690 km South Caucasus Pipeline (SCP,
also known by the name of the gas deposit in Azerbaijan, Shah Deniz),
reports that construction on the three-country project continues
successfully and already around 200 km of pipes are laid in the
ground. Over 50 percent of the mainline welding now complete in
Azerbaijan and over 60 percent complete in Georgia and the work is
going according to the timetable, the company reports. Construction
should be finished sometime in the first half of 2006 and operation
will start soon after. The company expects it will be able to ship
7.3 billion cubic meters of gas every year.

It was recently reported that the Shah Deniz pipeline would not
solve Georgia’s gas problems, however now the mood has changed. U.S.
involvement has halted motions to sell Georgia’s main natural gas
pipeline to the Russian state company Gazprom and in addition the
government has new hopes for the gas it will receive from the Shah
Deniz pipeline.

According to the existing agreement, in 2006 Georgia will receive 200
million cubic meters of natural gas, in 2007 and 2008 300 million and
after that 500 million annually. All of this supply will be received
at discount prices. In addition, Georgia annually will receive 5
percent of the transited natural gas through Georgia free of charge,
a portion that equates to an anticipated 300 million cubic meters.

The Georgian paper Rezonansi cites specialists as estimating that
the pipeline is capable of increasing its transit potential and could
eventually permit Georgia to receive 1 billion cubic meters of natural
gas annually.

Gilauri’s statement that the Shah Deniz gas could alleviate Georgia’s
gas problems is not too far fetched in the event that the these plans
are properly fulfilled. Today Georgia consumes around 1 billion cubic
meters annually. In case of a stable supply and proper consumption,
Georgia can achieve energy stability and maintain it under the current
plans for as long as the next two decades.

Until now the only supplier of gas to Georgia is Russia and once
the Shah Deniz starts functioning the country stands to benefit from
competition. In addition, Georgia is a transit country for Russia to
supply Armenia with the natural gas. Currently Armenia receives one
billion cubic meters of Russian gas annually and Yerevan demands an
increase in the supply because Iranian gas is more expensive. The paper
Akhali Taoba speculates that if Russia indeed supplies Armenia with
two billion cubic meters of gas, than Georgia will receive two million
cubic meters of gas free of charge, further aiding the gas sector.

From: Emil Lazarian | Ararat NewsPress