TBILISI: Gazprom Offers Cheap Gas In Exchange For Pipeline

GAZPROM OFFERS CHEAP GAS IN EXCHANGE FOR PIPELINE
By Diana Dundua

The Messenger, Georgia
Nov 9 2006

Gazprom’s Medvedev warns gas supplies will be cut off if no deal
is reached

Gazprom will not increase natural gas price from USD 110 to USD
230 per thousand cubic meters (tcm) for Georgia if Tbilisi sells it
some of its state assets. Chair of Gazprom’s Management Committee
Aleksander Medvedev stated at a press conference on November 7. He
did not specify which assets he wanted.

"In the past we have already hinted in which assets we were interested
though we did not get concrete answer from the Georgian side,"
Medvedev explained on Tuesday.

According to him, if an agreement is not reached with Georgia only
Armenia will receive natural gas from Russia.

Last year Gazprom made said it was interested in buying Georgia’s
North-South Caucasus gas pipeline (the main natural gas pipeline)
that is used to deliver Russian natural gas to Armenia and Georgia.

Speaker of Parliament Nino Burjanadze categorically ruled out the
possibility of selling the main natural gas pipeline.

"There will be no trade with Russia regarding the main natural gas
pipeline. I have always been and will always be against this. And
I can say with full assuredness that Saakashvili is also strongly
against this. Energy independence is of vital importance to us and
we are ready to pay any price for this," Burjanadze stressed at the
parliament session on Wednesday.

Prime Minister Zurab Noghaideli claimed that Gazprom’s statement was
not a surprise to him calling it "political blackmail."

"I will say that our companies are conducting negotiations about the
commercial price for natural gas not only with Russia, but with other
neighbouring countries, and in the end we will select the best choice
for the country. I want to repeat that we are ready to pay a commercial
price for natural gas but blackmail is absolutely unacceptable for us,"
Noghaideli stated on November 8.

"Russia should change its attitude toward its neighbours. It is just
impossible for Russia to achieve its political goals by developing
economic sanctions and energy blockades against Georgia in order to
make our county change its political course," Minister of Foreign
Affairs Gela Bezhuashvili, who is on an official visit to France,
stressed on Wednesday.

According to deputy chair of the parliamentary Budget and Finance
Committee, Vladimir Papava, Georgia will have to pay GEL 230 per tcm.

"Russia’s scheme is clear. Even if we sell these assets to Gazprom,
this will make it possible to maintain the current price on natural
gas only for this year and next year the price will go up again,"
explained Papava at the parliamentary session.

Opposition factions in parliament demanded that President Saakashvili
guarantee that Georgia will not sell the natural gas pipeline, they
also accused State Minister for Reforms Coordination, Kakha Bendukidze,
of lobbying for the sale.

In the past Kakha Bendukidze has said several times that there was
no threat in selling Georgia’s main natural gas pipeline, but he
always added that this was his personal position and was not shared
by the government.

"Gazprom has a business partner and agent in the Georgian
government-state minister Kakha Bendukidze," one of the leaders of
the opposition Democratic Front faction, David Berdzenishvili, said
on November 8.

After the government Session on Wednesday, Bendukidze stated that
the Georgian government would not give in to Russian blackmail and
it would never agree to deals like this with Gazprom. He also lashed
out at the opposition.

"Opposition members are dishonest people and they have some new ideas
making them sound like ultra-leftists. I recommend they change their
names to Communist-Bolsheviks," he said.

Pikria Chikhradze of the New Rights opposition party retorted that
Bendukidze was even prepared to sell his conscience too.

The opposition also demanded the administration buy back those state
assets that Russian businesses have already bought from Georgia.

According to them, this is important in order to gain energy security
and independence. Although Nino Burjanadze welcomed the idea, she
said that Georgia did not have money for that yet.