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Why Gazprom Is Coming to Georgia on P Publisher The Georgian Times Media Holding, Member of the World Association of Newspapers Distributed free N011 NEWSPAPER IN GEORGIA No 19 (1562) Monday, October 19, 2015 Weekly Newspaper, International Edition - Published by “The Georgian TIMES” Media Holding Since 1993 www.geotimes.ge www.geotimes.ge www.drotv.ge www.elwagon.ge www.wissol.ge www.socar.ge www.aversi.ge www.psp.ge www.ginoparadise.ge NDI Poll on Energy Geopolitics Mayors’ Performance, Other Local Issues Why Gazprom is Coming to Georgia On p. 4 Pending Verdict, Constitutional Court Suspends Law on Banking On p. 2 Supervisory Agency President Wants Govt On p. 6 Silk Road Forum Session over ‘Energy Tbilisi 2015 Security’ Georgian PM Meets Azerbaijani President in Baku ICC Prosecutor Energy Ministry Says Requests to Georgia Open to Gas Open Probe Supply Talks with into August War Gazprom On p. 6 EIB Lends EUR 100 mln to Georgia for Wastewater Infrastructure in Kutaisi On p. 7 Georgian Parliament Speaker Visits China Ministry of Finance Tbilisi City Ministry of Economy and of Georgia Hall Sustainable Development GOLDEN SPONSOR On p. 7 of Georgia POLITICS Monday, October 19, 2015 www.geotimes.ge 2 Energy Geopolitics: Why Gazprom is Coming to Georgia By DR. VAKHTANG MAISAIA Last month we were plies from Azerbaijan to Rus- Affairs Ali Agha Mohammadi informed that “mild sia amounted to 1.4 billion cu- to Moscow to discuss bilateral cooperation” had begun bic metres. In 2014, the volume energy issues, and according to between the Russian of shipments fell to 0.21 billion a subsequent Gazprom state- energy giant Gazprom, in cubic metres. No supplies were ment, “Special attention was the person of its President, carried out in 2015”. paid to global energy market Alexei Miller, and the Azerbaijan and Russia are trends and strategic partnership Government of Georgia, in currently undertaking a geopo- within the Gas Exporting Coun- the person of Fuel and litical rapprochement. This fur- tries Forum.” Energy Affairs Minister ther increases the likelihood of The South Pars field con- Kakha Kaladze. The two the two state-owned energy tains 8% of the world’s gas re- recently met in Brussels to companies doing a deal which serves, more than enough to discuss this in more detail, would deprive any country of have a profound effect on the and though the negotia- choice of supplier or price. The energy relationship between tions were secret it Georgian government under- Russia and Iran. Opened in subsequently emerged that stands that the country needs 1990, it is located in the Per- Gazprom intends to supply to diversify its energy deliver- sian Gulf to the northeast of Russian natural gas to ies and occupy a greater mar- Qatar, and is at a shallow depth Georgia and transit it ket segment itself. As Kakha and close to the shore, thus through Georgia to third Kaladze said, “We should not lowering production costs. The countries. depend on a single supplier. National Iranian Oil Company Larger gas supplies from the (NIOS) owns the field but Gaz- Georgia usually consumes Russian Federation at compet- prom, ENI and Total have sig- about 2 billion cubic metres of gas annually. Gazprom sup- plied about 0.3 billion cubic volume of gas it sends to Geor- entire production cycle (geolog- metres of this in 2014, repre- gia for domestic consumption ical exploration, extraction, pro- senting about 25%, the rest for three to six months, with- duction-processing, transit and being supplied by the Azer- out compensating Georgia with selling) of the gas it exports is baijani state energy corpora- a consequent price reduction. not exactly a transparent cor- tion, known as SOCAR. Geor- As for the other SOCAR sub- poration: its corrupt practices gia receives about 0.5 billion sidiary operating here, SOCAR have made it the target of eco- cubic metres of the SOCAR gas Georgia Petroleum, we need nomic sanctions from the EU as a transit fee from the South only note that the first SOCAR community and USA. Caucasus Pipeline, but the fuel station anywhere was If Gazprom and SOCAR, agreement concerning this ex- opened here in Georgia, in ostensibly rivals, made a deal pires next year, at which point 2008, rather than in Azerbaijan. between themselves they could Azerbaijan could impose new As of 2014 there were at least monopolize the energy markets terms on Georgia. There are 110 filling stations in Georgia, at regional level, leaving no several reasons to believe that these forming the company’s room for either to offer a better it will do so: the geopolitical largest retail fuel station net- deal to a client country. This is relationship of the two coun- work. SOCAR Georgia Petro- why Georgia is seeking to make tries has altered, economic cri- leum was fined for price-fixing separate deals with both par- sis has erupted in both coun- in July this year by the Geor- ties now. Concrete evidence of tries and SOCAR is seeking to gian Competition Agency. the need for this has been pro- expand its activities to the point We know that a second vided by the Caspian Energy of monopolising the Georgian round of negotiations between International Media Group, market. Gazprom and Georgia was held which stated: “According to the SOCAR Georgia Gas is earlier this month. However official release by Gazprom, the mainly concerned with import- this was not confirmed by the parties discussed issues of mu- itive prices are not ruled out. nificant stakes in it. In 2012 it ing natural gas into Georgia and Georgian government. This tually beneficial bilateral coop- and SOCAR signed a gas pur- Georgia would like to buy more produced 100 billion cubic me- constructing and restoring gas might be because the two par- eration in the energy sector. In chase-sale contract, under Russian gas”. However this tres of natural gas and over 5.5 pipelines. Its main revenues ties have entirely different in- particular, they negotiated the which supplies started in 2010. strategy is also very dangerous. million tonnes of oil. Gazprom come from the Shah Deniz gas terests, missions and goals. It resumption of natural gas sup- An addendum to this contract If the two gas companies choose therefore has no reason to be deposit and the ACG oil field. may also reflect the fact that plies to Azerbaijan by Gaz- was signed in 2012. In 2013, to make their own deal, they friendly to Georgia once it has However it recently reduced the Gazprom, which controls the prom. Back in 2009, Gazprom the volume of natural gas sup- are not going to respect any gained access to its pipelines, agreement one of them makes as Georgia cannot afford to do with a mere consumer. SOCAR without the transit fees for all is aware of the details of the this gas and will not be able to Georgia-Gazprom deal and is compete politically with an plotting its next move, which energy-codependent Iran-Rus- is much more likely to benefit sia axis. SOCAR and Gazprom than Gazprom’s approach to Georgia itself. Georgia is a geopolitical one, and Gazprom’s interest in Geor- has a global dimension. It is gia relates to its desire to tran- nothing to do with providing a sit produced and purchased in competitive energy supply to Iran via Georgian territory. Gaz- Georgia. The Georgian govern- prom has had an interest in ment may want competitive Iran’s South Pars gas field sinc energy, but as Gazprom’s aim e 1997, having invested more is so different, is Georgia likely than $2 billion in it, and it an- to get it? nounced on Thursday that it was exploring ways to cooper- The Georgian Institute for ate more closely with Iran in Geostrategic and Euro- the energy sector. Alexei Miller Atlantic Studies Institute, has welcomed Iranian Deputy Chairman Vice President for Economic Publisher/Editor in Chief Executive Editor: Copy Editor Director: The Georgian TIMES Nana Gagua Mariam Toidze Rumwold Leigh Kakha Maskharashvili # 1 English-Language Newspaper in Georgia Tel.: (+995) 555 293 003 Tel: (+995) 577 727 207 Tel: (+995) 599 501 452 Tel: (+995) 551 501 313 E-mail: E-mail: E-mail: E-mail: First published in 1993. [email protected] [email protected] [email protected] [email protected] The Founder and the President Malkhaz Gulashvili. Tel: (+995) 577 461 046 The Georgian Times Media Holding. 12, Kikodze str, Tbilisi, Georgia. Tel: (+995 32) 2934405, Contributions to The Georgian TIMES are welcome. If you are interested in submitting an article or E-mail: [email protected]; http://www.geotimes.ge news item, ect. please contact; Tel/fax: (+995 32) 2934405 PUBLICITY Monday, October 19, 2015 www.geotimes.ge 3 NEWS Monday, October 19, 2015 www.geotimes.ge 4 “We should try to have as many sources of supply as pos- (NDI) in a period between August 8 and September 10, focuses GEORGIAN PM MEETS sible,” he said. largely on local government and broad range of other local is- AZERBAIJANI PRESIDENT IN “I want to remind you that during the winter period we rely on sues; it has a margin of error plus, minus 3%. electricity supply from Russia and it has been the case for de- Of the three mayors who scored negatively, Narmania has BAKU cades already,” the Deputy Energy Minister said. the largest net-negative rating of 24 percentage points. While “But I want to stress that we should not in any way damage only 12% of respondents approve his performance, 36% rate his our relations with Azerbaijan, because we have long-term con- performance as poor; 44% are “neutral” and 7% say they “do not tracts with Azerbaijan and this helped us in the most difficult know.” times,” he continued.
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