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Azerbaijan To Provide Georgia With Alternative To Russian Gas In 2017 

Georgian Energy Minister Kakha Kaladze (file photo)
Georgian Energy Minister Kakha Kaladze (file photo)

In reaching an agreement to purchase gas from Azerbaijan, Georgia has both obviated the need to purchase any additional Russian gas in 2017 and temporarily deflected criticism of a recent deal with Gazprom.

The new agreement with Azerbaijan was announced on April 7 by Georgian Energy Minister Kakha Kaladze, who had incurred harsh criticism and faced claims he sold out his country's energy security after signing a two-year agreement with Russia's gas giant in January.

That deal entailed a phased shift from payment in kind to payment in cash of the tariffs Georgia receives for the transit of Russian gas across its territory to Armenia.

Critics of that deal ignore the fact that the volume of gas Georgia has hitherto received from Russia accounts for just under 10 percent of the total 2.4 billion cubic meters it imports annually; the remaining 90 percent comes from Azerbaijan.

In that respect, allegations by the opposition that the deal will result in a budget shortfall and threaten Georgia's energy security are misleading, especially considering that the amount of imported gas in question is consistent with figures from previous years. By comparison, in 2015, Slovakia and the Czech Republic depended on Russia for over 90 percent of imports; Germany receives some 30 percent of its gas from Russia.

Cash Payment

Kaladze is quoted as saying that, during the first three months of 2017, Georgia received 100 million cubic meters of gas from Russia. That is the equivalent of 10 percent of the first 1 billion cubic meters supplied via Georgia to Armenia, for which, according to Armenian Prime Minister Karen Karapetian, Georgia was to be reimbursed in kind, with the option of purchasing additional gas at the price of $185 per 1,000 cubic meters.

This year at least, however, Tbilisi will not have to do so. Instead, it has reached agreement with Azerbaijan's state oil company SOCAR and with the international consortium currently developing the Shakh Deniz offshore Caspian gas field to supply a total of 2.347 billion cubic meters of gas, adequate to cover its domestic requirements. The price of that gas has not been divulged.

Meanwhile, Gazprom will pay in cash for the transit of the remaining 1.2 billion cubic meters it is contractually obliged to supply Armenia with in 2017, and for the entire sum due in 2018. Kaladze has repeatedly declined to disclose the actual tariff, angering the opposition and NGOs that fear unwarranted concessions to Moscow.

Opposition Initiatives

The Georgian parliament majority has rejected two opposition bids to force disclosure of the terms of the treaty with Gazprom.

The first was a draft legal initiative by the two opposition factions into which the former ruling United National Movement split in January to amend the parliament statutes to permit the creation of an interfactional group that would have access to agreements that constitute a commercial secret.

The second was a demand by one of those two factions to establish a parliamentary investigative commission to evaluate the agreement with Gazprom, the website reported on February 23.

It is not only opposition parties that are alarmed by the possibility that the agreement is detrimental to Georgia's interests.

A poll conducted by the International Republican Institute between February 22 and March 8 reportedly found that 58 percent of the 1,501 respondents took a negative view of the agreement, even without knowing the precise terms, InterPressNews reported on April 5. Only 11 percent expressed approval.

It is still unclear whether, as veteran parliamentarian Gia Volsky has implied, the Georgian government was strong-armed into making concessions in the face of a threat by Gazprom to suspend gas supplies to Armenia via Georgia altogether and instead supply Armenia through an alternative pipeline via Iran.

The views expressed in this blog post do not necessarily reflect those of RFE/RL.

About This Blog

This blog presents analyst Liz Fuller's personal take on events in the region, following on from her work in the "RFE/RL Caucasus Report." It also aims, to borrow a metaphor from Tom de Waal, to act as a smoke detector, focusing attention on potential conflict situations and crises throughout the region. The views are the author's own and do not represent those of RFE/RL.


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