RUSSIAN GAS MONOPOLY TO DOUBLE PRICE OF GAS FOR GEORGIA AMID POLITICAL TENSIONS

China Post, Taiwan
Nov 2 2006

Russia’s state-controlled natural gas monopoly OAO Gazprom said
Thursday it would more than double the gas price for neighboring
Georgia.

The announcement signals Moscow’s continuing recalcitrant stance in its
conflict with its small ex-Soviet neighbor even as Georgia’s foreign
minister is visiting Moscow in the hope of easing spiraling tensions.

Gazprom _ which has been criticized in the past as a tool of Kremlin
policy _ said in a statement it plans to charge Tbilisi US$230
(€180) per 1,000 cubic meters of gas, compared with the US$110
(€86) that it pays now.

The statement came as Georgia’s Foreign Minister Gela Bezhuashvili
visited Moscow in a bid to defuse tensions that peaked after Georgia
briefly detained four purported Russian spies in late September.

Moscow responded with a sweeping transport and postal blockade on
Georgia and a crackdown on Georgian migrants living in Russia.

Relations between Moscow and Tbilisi have steadily deteriorated
since the 2004 election of Georgian President Mikhail Saakashvili,
who has sought to take the Caucasus nation out of the Russian orbit,
bolster ties with the West and join NATO in 2008 _ a course that has
angered Moscow.

Moscow has shrugged off Western calls for lifting the sanctions
against Georgia, saying it was acting because the Georgian government
is plotting to bring its breakaway provinces of Abkhazia and South
Ossetia back into the fold by force _ allegations Georgia denies.

Gazprom has consistently argued that price increases for former
Soviet neighbors are a long-overdue recalibration toward market
pricing. However, they have been widely seen in the West as part of
the Kremlin’s attempts to put pressure on ex-Soviet neighbors.

Gazprom temporarily switched off the gas it supplies to Ukraine at the
start of the year after Kiev refused to accept an abrupt price hike
that was seen as a calculated blow to its Western-leaning government.

Since the appointment of Kremlin-friendly Prime Minister Viktor
Yanukovych, however, Ukraine has been able to negotiate a much more
gentle price rise for 2007.

Any dispute leading to cuts for Georgia could hit the nation’s
struggling economy hard. Tbilisi already was left freezing for a week
early this year after a pipeline explosion in southern Russia cut
supplies. Saakashvili blamed Moscow for the interruption, charges
Russian officials angrily denied.

Cuts would also deal a blow to Georgia’s landlocked neighbor, Armenia,
which receives its gas from Russia via Georgia. Armenian businesses
already have been forced to organize costly new export routes to
Russia due to the transport blockade.