Georgia looks to BP and Iran to replace Russian gas

"It is technically possible to meet Georgia's gas demand (with alternative gas)," Georgia's Energy Minister Nika Gilauri told reporters.

"We can get three, four, five billion cubic metres of gas. Really, this is a subject for talks," he said.

Russia's gas monopoly Gazprom threatened on Thursday to more than double gas prices for Georgia from 2007 in a rise Tbilisi branded as political.

Russia has cut transport links with Georgia in a row rooted in Tbilisi's pro-Western policies and a fight for influence over separatist Georgian regions propped up by Moscow.
Gazprom wants Georgia to pay $230 per 1,000 cubic metres from 2007.

If that price becomes final the Caucasus state -- where the World Bank says the average person's income is just over $100 a month -- would be paying the same price as Gazprom's rich customers in the European Union.

Many analysts and politicians, including U.S. Vice-President Dick Cheney, have said the Kremlin often uses its vast energy resources to blackmail its smaller neighbours.
In January, Gazprom briefly cut supplies to Ukraine following a pricing dispute with the pro-Western leadership in Kiev. The cutoff also briefly reduced transit supplies to Europe and shocked the European Union.

Georgia's best potential alternative is gas from the Shakh Deniz field off Azerbaijan's Caspian Sea coast. The field is operated by a consortium of BP and Norway's Statoil.
That consortium is completing work on a pipeline linking the field to the Turkish market, via Georgia.

Under its transit contract, Georgia from 2007 is entitled to take off the first 250 million cubic metres at a price of $63 per 1,000 cubic metres. It is unclear what price Georgia would pay for anything over that quota.

The link's total capacity is around 8.0 bcm a year and Turkey will buy the bulk of this gas at the first stage. Capacity could then double if the group agrees to export more gas to southern Europe via Turkey.

Iran, which has the world's second largest gas reserves after Russia, has at times this year been supplying small volumes to Georgia. Gilauri said these volumes could rise.

Georgia, with a population of about five million people, consumes around 1.8 bcm a year. Gazprom supplies most of this gas at a price of $110 per 1,000 cubic metres. Reuters