RUSSIAN GAS TRANSIT VIA GEORGIA TO ARMENIA HALTED DUE TO PIPELINE DAMAGE
by Andrew Neff

World Markets Research Markets
Global Insight
Jan 12 2009

Russian gas supplies to Armenia were halted on Friday (9 January) as a
result of damage to a section of the pipeline which crosses Georgia,
according to news reports. The Georgian Energy Ministry said that
damage to a section of the Trans-Caucasus pipeline, which carries
Russian gas across Georgia to Armenia, had occurred in the Gardabani
district, with emergency repairs underway. Russian gas giant Gazprom
suspended gas deliveries via the pipeline while Georgian officials said
repair operations would take five days to complete. Armenia relies on
Russian gas imports for all its gas needs, although Georgian Energy
Ministry officials said that the outage would have no immediate impact
on Armenia since the country has a two-month reserve of gas supplies
to draw from at the moment.

Significance: Gazprom and its Armenian joint venture, ArmRosGazprom,
offered to help Georgia repair the damage, calling for a resumption
of gas supplies to Armenia "as soon as possible." The halt in the
delivery of some 2 million cm/d of Russian gas via Georgia could
aggravate existing tensions between the two neighbours following
their brief war in August 2008, but thus far both sides are playing
down the disruption, with Georgia stating that it intends to complete
the repair work–which was originally intended to be completed in
the spring–as soon as possible. Georgia itself no longer relies on
Russian gas imports via the pipeline as its shifted its dependence to
gas imports from Azerbaijan after the South Caucasus Pipeline (SCP)
was initiated in 2007, allowing for Azerbaijan to export its growing
volume of gas production from the Shah Deniz field to Georgia and
onward to Turkey.