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Iran’s gas supply to Georgia: common sense vs. political calculation

Iran’s gas supply to Georgia: common sense vs. political calculation

The intrigue, which has been unfolding around the issue of Iranian gas, the supplies of which to Georgia should start, has acquired a new light today, on Feb. 17.

Iran may supply its gas to Georgia through Azerbaijan, Georgian deputy prime minister, energy minister Kakha Kaladze said while in Iran Feb. 17. At the same time, Kaladze went on to add that the supplies may be also carried out on the territory of Armenia.

Interestingly, the day before that, on Feb. 16, head of the National Iranian Gas Export Company (NIGEC) Alireza Kamali after the meeting with Kaladze said that Iran was considering the possibility of exporting 200 million cubic meters of gas to Georgia during the next seven months through Armenia. Kamali made the remarks not even mentioning Azerbaijan as if the route issue was resolved.

Here the question arises, if the day before, Kaladze had already decided on the route, why today, on Feb. 17, while in Tehran, he mentioned Azerbaijan as a possible transit country? Perhaps, because the Georgian side understands that Iran’s desire to involve its longtime ally Armenia at least in one regional project is not beneficial for Georgia itself.

First, Georgia shouldn’t forget the fact that from the technical point of view, the transit of Iranian gas through Armenia’s territory is problematic to put it mildly. The issue is that Armenia has no relevant infrastructure to transport Iranian gas to Georgia through its territory. The diameter of the pipe via which the gas from Iran will be delivered to Armenia, is 700 millimeters and its capacity is around two billion cubic meters of gas per year.

At present, the pipe is not completely filled. However, considering the scheme of the Iranian-Armenian exchange “gas in exchange for electricity”, the gas pipeline will be filled completely later, after commissioning the third power transmission line and Armenia will start to supply around 5-7 billion kilowatt hours of electricity to Iran per year.

It is obvious that the gas pipeline which links the two countries is not scalable and the plans regarding the volume of transportation via this pipeline do not include the gas for Georgia. If the matter rested in the gas supply project in a few years, perhaps, it would be possible to hope for improvement of the infrastructure however, it is early to talk about it. But gas from Iran must be supplied to Georgia in March.

A significant fact is that Gazprom’s Armenian subsidiary built the Armenian section of the gas pipeline. Earlier, it made huge investments in the construction. At present, it is the operator there. There are some doubts whether Gazprom will want to deliver its pipe for the needs of Georgia.

As for Azerbaijan’s technical possibilities, it has been repeatedly stated about them. SOCAR head Rovnag Abdullayev said in November 2015 that SOCAR will fully upgrade the Hajigabul-Gardabani gas pipeline to increase its capacity for supplying gas to Georgia.

Moreover, the work on expansion of the South Caucasus pipeline within the Shah Deniz-2 project has already begun. This work includes the construction of a new pipeline in Azerbaijan’s territory and two new gas-compressor stations in Georgia. The expansion of the South Caucasus pipeline will triple its capacity up to over 20 billion cubic meters per year. In turn, it will supply more gas to Georgia, including the swap method.

It is obvious that a country, which is pierced with veins of gas pipelines and has the financial capacity to improve the infrastructure issues, will not have problems with the transit of additional gas volumes. Then it will be obvious that whether common sense or another political calculation wins.