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David Mirtskulava

David Mirtskhulava: Georgia Has to Pay No Political Price To Gazprom

Georgia’s ex energy Minister David Mirtskhulava talks about the ongoing negotiations with GazProm, the agreement to be signed in December and energy security issues.

What is your opinion on the current negotiations with GazProm and considerations as if the country may lose independence?

– Similar considerations are exaggerated, because Energy Minister Kakha Kaladze has cast light on the subject of negotiations, namely, on plans for growing Russian gas transit volume. This issue was also confirmed by the Energy Minister of Armenia. Naturally, Georgia is a transit country and Georgia transits Russian gas to Armenia at full capacity. We take 10% of the transited gas.

– What would you say about the political price of this deal, because experts assert GazProm is a political instrument for Russia? How was this issue treated when you was leading the Georgian Energy Ministry?

Before 2003 Georgia signed the agreement that determined Georgia’s independence from GazpRom’s natural gas. The agreement called on constructing the Baku-Tbilisi-Erzurum gas pipeline, the South Caucasus gas pipeline, that transports Azerbaijani natural gas from the Shah-Deniz field to Turkey and the part of the gas remains in Georgia. Georgia, as a transit country, receives 5% of the transited volume and 0.5 billion cubic meters of gas at the special tariff.

The consolidated volume reaches 700 million cubic meters that is added 200 million cubic meter Russian natural gas from the transit to Armenia and Georgia’s total natural gas inflows from transit deals makes up 900 million cubic meters. For several years this volume was sufficient to satisfy the needs of the Georgian population and the Georgian power sector.

Today, our country needs to draw more natural gas volume to fully satisfy the domestic demand and to supply cheap social gas to the Georgian power sector.

Hence, the 2002 agreement has determined Georgia’s energy security and natural gas supply depends on such reliable supplier as our friendly country of Azerbaijan and SOCAR. As to the arisen questions, SOCAR supplies natural gas to commercial consumer too. Natural gas consumption is growing in Georgia and therefore, the country needs to draw alternative suppliers.

– Azerbaijan has entered into agreement with GazProm. The Azerbaijani President noted a couple of days ago Azerbaijan has no plans to get integrated into the European community. Ilham Aliyev has also warned Europe to abstain from interfering into the internal affairs of Azerbaijan. Should we expect the same tendencies in Georgia?

– According to my information, the Azerbaijani President’s statement refers to the second stage of the Shah Deniz project to prove there are sufficient volumes and Azerbaijan will be able to supply natural gas to Europe by 2018. But the current situation suggests there are certain difficulties regarding additional volumes of natural gas in Azerbaijan. Therefore, commercial companies, not the state sector, consider availability of concluding contracts with GazProm. I mean some enterprises, gas filling stations. Naturally, commercial consumers should find the Russian natural gas prices affordable.

Today gas filling stations have to purchase gas at the starting price of 290. If GazProm offers lower tariffs, the Russian company may cooperate with this small segment as part of commercial contracts without no threats to Georgia’s energy independence.

– Changing tariffs make European countries seek alternative energy carriers…

– Naturally, the west is trying to get rid of the dependence on GazProm because they consider the Russian natural gas to bear the political component too. I absolutely share their position. If you examine the tariff structure, there is serious difference. Poland has spent huge financial resources to construct liquefied gas terminals to partly ensure energy dependence. Georgia resolved the same issue through the 2002 agreement, when the country joined major projects of the Azerbaijani gas suppliers. If we analyze this situation and the portion of Russian natural gas in our country, we will see

Georgia depends on the Azerbaijani supplier by 90%. Georgian residents and the Georgian power sector fully receives this social gas to satisfy the household needs and the Russian gas cannot ever compete with Azerbaijani preferential gas.

– This issue caused confusion, because the first information on the current negotiations was published on the GazProm website.

–  The GazProm website published the information, because Georgian Energy Minister Kakha Kaladze met with the GazProm head in Brussels for the first time, but transit issues are negotiated by the Georgian and Russian parties every year. The Minister has also noted about 27 changes have entered the agreement. This is a routine that permanently continues, because Georgia is a transit country and Armenia receives Russian natural gas through Georgia.