TODAY.AZ / Business

Azerbaijan to supply Georgia with additional gas

11 July 2006 [15:20] - TODAY.AZ
Finally the Georgian government has cut a deal to receive extra natural gas from Azerbaijan.

The Azeri Minister of Industry and Energy, Natik Aliev, said that his country was ready to deliver extra natural gas to Georgia, but added that this gas would be sold at the market rate.

The time when Caspian gas will reach the global market via the South Caucasus pipeline is drawing nearer. Georgia, looking to be less dependant on Russian energy supplies, has been seeking to receive more gas from the pipeline than the deal originally specified. The government had been hoping-perhaps naively-that it would be able to purchase this extra gas at a knockdown price. It seems, however, that this was nothing but a pipe dream: Azerbaijan has put profits ahead of its strategic partnership with Georgia, and is demanding that market prices be paid. What market prices might actually be in the winter of 2006-7 is very difficult to say.

Today Georgia pays USD 110 for one thousand cubic meters of Russian natural gas. The price to be?increased next year. Whether Russian gas will turn out to be more expensive than Azeri or not, it is vitally important for Georgia to diversify its supplies. Over the coldest period this winter, a 'terrorist attack' on the trunk pipeline that supplies Georgia with Russian gas left the country shivering. The 'terrorists' are widely believed to be in the employ of the Kremlin.

The current deal gives Georgia 5 percent of the transited gas, and the possibility to purchase an extra 5 percent for USD 55 per thousand cubic metres, though this is not enough to totally satisfy Georgian consumers.

during the Georgian Prime Minister's visit to Baku his Azeri opposite number emphasized that Azerbaijan considers Georgia its most important strategic partner not just regionally but world wide. Artur Rasizade, the Azeri prime minister, stated that in 2005 the Azeri-Georgian trade turnover increased by 72 percent.

"The construction of the South Caucasus natural gas pipeline ushers in a new era in the relationship between the two countries." Rasizade said.



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