Azerbaijan, Georgia to reach agreement on gas supply in coming days

By Aynur Karimova

Tbilisi eyes an opportunity to agree on supply of more “blue fuel” from Azerbaijan, which is Georgia's main gas supplier with a specific weight of 74.9 percent of total gas imports.

Georgian Energy Minister Kakha Kaladze believes that the two South Caucasus neighbors will reach an agreement on this issue "one of these days."

Addressing the Southern Gas Corridor Advisory Council Second Ministerial Meeting in Baku on February 29, Kaladze said that Georgia has been negotiating with a consortium of Shah Deniz for several months on increasing the volume of Azerbaijani gas supplies.

"The matter rests in additional 400-500 million cubic meters per year," he said.

Currently, Georgia is discussing with Gazprom the possibility for the Russian side to pay for gas transit to Armenia in money.

“We get 10 percent of Russian supplies volume and renew the contract every year,” Kaladze said. “Azerbaijan is Georgia's strategic partner, and we have established long-term friendly relations. Unfortunately, some forces use such moments to spoil relations between the two countries. But they won’t succeed."

Russian gas deliveries to Georgia are carried out only in the form of payment for its transit to Armenia, for which the country is supplied with 10 percent of total shipments. Gazprom supplied 300 million cubic meters of gas to Georgia in 2014.

Daily gas consumption in Georgia exceeds 11 million cubic meters per day and about 2.5 billion cubic meters per year. Last year, the country imported 1.51 million tons of oil equivalent of natural gas in the amount of $314.3 million from Azerbaijan.

On an annualized basis, the volumes of Georgian natural gas imports from Azerbaijan in terms of value increased by 9.4 percent, in quantitative terms by 127,170 tons of oil equivalent, or by 9.2 percent.

Annual growth of the Georgian market is up to 10 percent or maximum 250 million cubic meters per year. With such a growth rate, gas consumption in the country will reach five billion cubic meters in the next 10 years.

No doubt that this amount is not beyond the power of Azerbaijan, which enjoys huge gas resources. In this regard, Azerbaijan plans to additionally supply 500 million cubic meters of gas a year to Georgia.

“Previously, we supplied 800 million cubic meters of gas a year to Georgia from the Shah Deniz,” said Rovnag Abdullayev, Head of Azerbaijan's state energy giant SOCAR. “We have managed to increase the supply through that route to 1.5 billion cubic meters as well as to 1.5 billion cubic meters via a pipeline connecting the two countries in Azerbaijan’s Gazakh region.”

Currently, there is an opportunity to additionally obtain 500-700 million cubic meters of gas from the Shah Deniz consortium.

“We can use a part of that gas volume in Azerbaijan and supply another part to Georgia and Turkey,” Abdullayev added.

“Earlier, Azerbaijan did not manage to technically increase gas supply to Georgia,” he said. Taking the possibilities into account, SOCAR held negotiations with the Shah Deniz consortium and it was decided to increase the supply in winter and summer periods to 70 percent to 30 percent ratio (earlier 60 percent to 40 percent ratio).”

Azerbaijan supplies gas to Georgia via the Hajigabul-Gardabani pipeline with a gas pumping capacity of 6.5 million cubic meters per day. The second way carrying gas to Georgian consumers is the Baku-Tbilisi-Erzurum (South Caucasus) Pipeline, through which the gas from the first stage of the Shah Deniz field is supplied to Georgia and a large proportion goes through its territory to Turkey.

No talks on gas purchase from Iran

Georgia, which enjoys significant transit potential for delivering hydrocarbon resources of the Caspian basin, has recently expressed interest in transiting Iranian blue fuel to Europe.

Despite the fact that earlier Kaladze said his country can import Iranian gas “either through Azerbaijan or through Armenia, he told Trend on February 29 that currently, Georgia is not in talks on the purchase of Iranian gas due to high prices.

“The Iranian gas prices are not competitive, so the issue on the purchase of Iranian gas can only be discussed in the future,” Kaladze noted adding that in the future, transportation of Iranian gas will be possible through the territory of Azerbaijan.

In mid-February, Alireza Kameli, the Head of the National Iranian Gas Export Company, said the Islamic Republic is considering a plan to export 200 million cubic meters of gas to Georgia in a course of seven months.

He further said that Tehran and Tbilisi would consider signing a long-term deal, if they find a short-term gas deal economically justified.

Iran plans to increase gas production to 1.1 billion cubic meters per day by 2018.

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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova

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