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Kazakhs Drop Georgian Port Plan, Citing Instability

Destruction at Poti's port facilities in mid-August

Destruction at Poti's port facilities in mid-August

ASTANA (Reuters) -- Kazakhstan has abandoned plans to build a grain terminal in the Georgian port of Poti due to political instability, the agriculture minister has said.

Kazakhstan, one of the biggest foreign investors in Georgia, sees the country as a key oil-supply route to Europe, part of its drive to diversify exports away from Russia.

"We've dropped the Poti [plan]," Agriculture Minister Akylbek Kurishbaev told a parliament session on September 22.

"A letter has been sent to the [Kazakh] government urging it not to go ahead with the investment and leave it at that. It's clear that this is linked to international problems, to the situation in Georgia."

Kazakhstan had previously said its investment in Georgia would not be jeopardized by Tbilisi's conflict with Russia. Georgia said it was "very surprised" by the September 22 announcement.

"We carefully study such decisions," First Deputy Economy Minister Vakhtang Lezhava told Reuters. "Only Kazakh companies decided after the war to abandon investment plans in Georgia, while others continue to invest in our country."

At the height of the conflict, in August, Kazakhstan suspended oil shipments through another Georgian port, Batumi, which is controlled by Kazakh state oil company KazMunaiGaz. Shipments were restored in early September.

Kazakhstan announced plans to build the terminal in Poti, on Georgia's Black Sea coast, some time next year as part of its push to diversify supply routes for all of its main export products.

The Poti terminal had been due to have capacity of 350,000-500,000 tons a year and be able to store 24,000 tons of grain at any one time.

Kazakhstan, five times the size of France and Central Asia's biggest grain producer, harvested a post-Soviet record of 20.1 million tons of grain last year.