Georgia remains in monopolistic clutches of Azerbaijani gas


In the fall of 2015 Georgia announced that it was going to diversificate the gas sources as possible options pointing to Russia and Iran.

This intention has caused a stir in the Georgian-Azerbaijani relations.

The visits of Georgian and Azerbaijani high-ranking officials, including the top leaders followed one another.

The Georgian side announced that the demand for gas consumption increased and Azerbaijan is not able to meet the new quota.

The Azerbaijani companies claimed the opposite.

Georgia’s annual demand for gas makes up 2,3 billion cubic meters, as a transit fee, for the Russian-Armenian gas supply pays "Gazprom" and the rest supplies Azerbaijan.

Georgia receives the Azerbaijani gas through two pipelines.

In 2015 in the framework of agreement on South Caucasus pipeline Georgia received 712 million cubic meters of gas from Shah Deniz, and 1.48 billion cubic meters of gas, in the framework of the agreement with SOCAR.

The price of 300 million cubic meters of gas supplied by "Gazprom" makes up
$ 110 for 1,000 MG.

The fee transit defined by the Georgian side for 1,000 cubic meters makes up 1,2 dollars per 100 km.

In comparison, the fee for Russian gas transit to Europe via Ukraine makes up USD 2,8 and by TANAP’s agreement is $ 1,5.

That is, the fee for transit of gas supplies to Armenia is far from the reasonable prices accepted by the international practice.

The official Tbilisi started a real diplomatic game, keeping the region in intrigue.

The issue is that the Georgian-Azerbaijani gas deal expires in 2017 and it is vital for Georgia to maintain the preferential price, offered by Azerbaijan.

It sells 1,000 cubic meters of gas to Georgia at $ 140, which is an unprecedented low price on the market.

The Georgian economy estimates the gas price in this frames, as it is unable to pay by the world market prices.

Only in February the Deputy Prime Minister and Minister of Energy and Natural Resources of Georgia Kakha Kaladze paid several official visits to Azerbaijan and on February 15 he visited Tehran.
The final result is following: After several rounds of negotiations on March 4 the agreement was signed between the Georgian and Azerbaijani oil company, according to which Tbilisi is to receive additional 500 million cubic meters of gas for the needs of the commercial sector.

Let’s not forget to mention the factor of "Gazprom" and the counter impact of the Georgian opposition and population.

The Georgian authorities make efforts to restore the gas supply from “Gazprom” as well, noting that the volume of gas supplied to Armenia has increased, according to which Georgia is to receive more gas.

But the protests of the Georgian opposition and population against “Gazprom” has contributed to the return of Georgia to a new agreement with Azerbaijan.

The situation can be actually instructive for us. The Georgian experience has proved that the diplomatic achievements are not only the result of the skills and abilities of the official negotiations.

The demands of the population are also important.

The key trump card of negotiation is the availability of alternatives.

Georgia has managed to achieve the desired results in the short term but the dependence on Azerbaijan became long term, which gives additional leverage to Azerbaijan to force Georgia to conduct its policy in accordance with Azerbaijan.

By Anna Barseghyan

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