Georgia Concludes Talks with Gazprom over Gas Transit to Armenia

Georgia and Russia’s energy giant Gazprom have reached a new agreement on gas transit to Armenia after the previous one expired on December 31, 2018.

The past agreement was reached on January 10, 2017, under which Georgia, as a transit country for the transportation of Russian gas to Armenia, throughout 2018 received payment from Gazprom.

Russia was paying Georgia for gas transportation by supplying natural gas to the amount of 10% of the total volume of the transported gas.

The information about the conclusion of the new deal was released by the Deputy Minister of Economy and Sustainable Development Natia Turnava at a special briefing.

“As a result of the negotiations with Gazprom, our commercial conditions have been improved: the transit fee has been increased and the Russian gas price has been reduced,” she said.

The Deputy Minister noted that the negotiating team from Georgia made good use of the world's oil price dynamics, adding that because of this, the Russian side expressed readiness to make compromises and Georgia has achieved improvement in the commercial interests of the country. Turnava said the negotiations are successfully over despite “long and difficult talks,” adding the Georgian side was guided by two basic principles, and both principles were well kept.

“First, it is our country's energy independence and security. Two of the most important strategic segments of our market, population and electricity generation, are fully supplied and will still be supplied with Azeri gas,” she added.

Turnava emphasized that Azerbaijan remains Georgia’s main gas supplier and strategic partner in this field.

“Moreover, the share of Azeri gas will further increase in the Georgian market in the coming years, after the Shah Deniz Stage 2 is fully launched,” she added.

The Gazprom contract has been extended for two years and will be valid during 2019-2020, according to the Deputy Minister.

Minister of Foreign Affairs David Zalkaliani also commented on the issue, saying the new agreement is much better than the previous one.

“Energy-independence and security are guaranteed by this agreement,” the minister claimed, without going into any further detail.

Opposition parties say it is unfortunate that the agreement with Gazprom is confidential, noting that the issue is high-profile and society has right to know the details.

The MPs call on the Minister of Economy, Giorgi Kobulia, to come to parliament to give further explanation. They claim that the agreement with Gazprom which existed before 2016 was much better as Georgia was receiving natural gas in exchange for letting Russia transit it to Armenia.

Giorgi Baramidze from the United National Movement (UNM) says that the country’s budget is losing millions due to the agreements of the government with the Russian energy giant.

“One problem about this deal is that we do not know how much Georgia is getting for Russian gas transit to Armenia, and the second problem is that we still need to buy gas from Russia,” he said at the press-conference of the United Opposition.

The European Georgia party also questioned the deal with Gazprom. The party MP Giorgi Kandelaki says they cannot trust the government if it does not give proper explanations.

“The Economy Minister promised us he would come to the sitting of the Economic Committee to speak about the deal and we are looking forward to this discussion,” he added.

Gazprom owns the world’s largest gas transmission system, with a total length of 172.1 thousand kilometers.

Gazprom sells more than half its gas to Russian consumers and exports gas to more than 30 countries within and beyond the former Soviet Union.

By Thea Morrison

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14 March 2019 16:53