Georgia Not To Yield Gas Pipelines To Russia

GEORGIA NOT TO YIELD GAS PIPELINES TO RUSSIA

Kommersant, Russia
Nov 9 2006

Gazprom proposed to Georgia to purchase some of its gas pipelines and
cut by half gas prices for Georgia in return for it. It also warned
to terminate gas supplies January 1, 2007 if no contract is made.

Georgia responded by calling the proposals political blackmail and
its prosecutors set to arresting local gas traders.

Yesterday, a raft of high-ranked bureaucrats of Georgia, including
State Minister Kakha Bendukidze and Parliament’s Speaker Nino
Burdjanadze, emphatically denied the proposals of Alexander Medvedev,
deputy chairman of Gazprom’s management committee. Medvedev suggested
cutting by half future gas prices for Georgia, from $230/ths cu meters
to today’s $110/ths cu meters, if Georgia agrees to sell some portion
of gas pipeline infrastructure to Gazprom.

We were ready for surprises, but it is the political blackmail and
we won’t yield to it, vowed Georgian Premier Zurab Nogaideli.

Of all CIS countries that faced such proposal of Gazprom, only Armenia
has agreed to it. According to news service of Armenia’s government,
by late this year, they will elaborate procedures for transferring
Iran-Armenia’s gas pipeline under control of Armrosgazprom. Gazprom
will own 58 percent in this company once it buys out new stocks for
a total worth of $118.8 million.

The asset will allow Gazprom to control gas supplies to Georgia from
Iran. When the gas monopoly of Russia fixes a single basic rate of
$230/ths cu meters for Transcaucasia, it will be able to present it
as an economically reasonable price.

Further aggravating the energy clashes, Georgian prosecutors set to
detaining traders of Russia’s gas. Revaz Urushadze, general director of
Georgian National Gas Transport Co., and Alexander Dolidze, an employee
of this company, were arrested Wednesday on charges of corrupt deals,
which led to material damage to Georgia’s budget.