Georgia believes Shah-Denis natural gas will not be enough

Nov 10, 2004 01:00 AM

On November 6 Minister of Energy Nika Gilauri gave an interview in which he sceptically evaluated the importance of Baku-Erzumi natural gas pipeline for Georgia.
According to Gilauri, the amount of natural gas that will remain in Georgia in lieu of transit tax will not fully meet the country's demands, and so cannot be considered as a cheap alternative source which can replace the natural gas imported from Russia.

Gilauri stated that he does not see the Baku-Tbilisi-Erzumi gas pipeline project as of vital importance in the near 10 years. Nor does he share chairman of the parliamentary commission for energy Gia Natsvlishvili's optimistic belief that Shah-Deniz natural gas transit will provide an alternative cheap gas supply for Georgia.
In his interview, Gilauri noted that only in 2007 would Georgia begin receiving its free 5 % of Shah-Deniz gas. Georgia will be able to purchase a further 5 % at the reduced price of $ 55, but this is only $ 5 less than gas imported from Russia by Gazprom.

Furthermore, Gilauri notes that Georgia uses approximately 1 bn cm of natural gas annually, and expects that demand will increase in the future. According to the schedule, around 200 mm cm are expected to pass through the pipeline in 2006, meaning that Georgia will receive a paltry 20 mm cm, only a fraction of its requirements.
This situation leads the minister of energy to argue that the Georgian side must participate in negotiations to directly import Shah-Denis natural gas from Azerbaijan before the project is activated because otherwise, Georgia will only be able to receive more gas in the unlikely event that Turkey does not want its share.

Gilauri's comments undermine the belief of some analysts that the Baku-Erzumi gas pipeline will allow Georgia to gain energy independence from Russia.

Source: The Messenger
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