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All that Glitters is Gold for Georgia's Sexy New Energy Minister

By Jen Alic | Wed, 17 October 2012 22:47 | 0

You know a country is serious about its energy policy when it installs a soccer star with zero background in the sector as the new Minister of Energy.

Earlier this week, Georgian prime minister-elect Bidzina Ivanishvili presented his new cabinet to an enthralled public, announcing his choice of football star Kakha Kaladze who has played for top Italian clubs Milan and Genoa, for the post of Energy Minister.

Ivanishvili, a French citizen and Georgian billionaire, is still riding high on his 1 October electoral victory in which he defeated President Mikhail Saakashvili’s parliamentary party. 

It’s all glitter and gold: A pet of the Russian Orthodox Church, Ivanishvili accrued his fortune in Russia, and what would make for a better accessory for an Eastern oligarch than a beloved soccer star?

But while the crowd just loves a star-studded soccer major, surely this type of accessorizing is not much of a victory for Georgian energy.

Let’s look at Georgia’s potential:

Strategically speaking, Georgia is a vital oil and gas route, situated as it is between ever-warring Azerbaijan and Armenia. This makes Georgia a key route for oil and gas exports originating from the Caspian Sea and Central Asia and making their way to Europe via Turkey and the Black Sea. Thus we have the Baku-Tbilisi-Ceyhan (BTC) pipeline, which makes for a convenient export route that bypasses Russia.

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The BTC pipeline carries 1 million barrels per day of oil from the Azeri-Chirag-Gunashli oil field in the Caspian Sea to Turkey's Mediterranean port city of Ceyhan. It also pumps Azeri gas to Turkey. Brought online in 2005, the pipeline probably contributes around $50 million to Georgia’s state coffers annually.

The geopolitical importance of this pipeline should not be underestimated. Its importance can expect a further boost if Turkey and the Iraqi Kurds succeed with their plans to build two more pipelines in northern Iraq’s disputed territory of Kirkuk, which would connect up with BTC and supply Ceyhan with more oil and gas.

Another important pipeline, the 830-kilometer West Route Export Pipeline (WREP) is a BP-led project that has been pumping Azeri crude to Georgia’s Supsa Terminal since 1999. 

Now these geopolitical assets are presumably to be run by a soccer player who indeed has energy on the field but lacks even the basis of education or experience to run any ministry--let alone the top position for the country’s energy policy.

Never fear, says Ivanishvili. The 34-year-old soccer player who retired in May “is a talented man and will be able to master a new trade”, he told the Associated Press. This is apparently bolstered by the fact that he holds a history degree from a Georgian university. 

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Kaladze promised to give priority to renewable energy and said Georgia should abandon its plans to build hydro-power plants. "We don't want to develop the energy sector at the expense of the environment," he said. "Wind and solar energy may be quite expensive, but we should think about moving in that direction."

Kaladze is being touted as a successful businessman, owning a majority interest in the Tbilisi-based Progress Bank as well as a handful of investments in Ukraine, Italy and Kazakhstan, according to Radio Free Europe/Radio Liberty. His involvement in various charities has also put him on the media map.

He’s certainly no Steven Chu—US energy chief extraordinaire--but plenty (opposition aside) think for some reason that he’s up to this task, despite what is at stake. The more likely scenario is that he is a puppet to be controlled by Ivanishvili’s “Georgian Dream” coalition. This is oligarch style—flashy new toys with remote controls.

By. Jen Alic of Oilprice.com

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Jen Alic
Company: ISA Intel

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