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Eurasianet

Eurasianet

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Gazprom Loses Gas Deal As Georgia Opts For Azeri Gas

Gone is the fear of betrayal, and bilateral love, once again, is in the air. Georgia, the strategic crossroads for energy alternatives to Russia, finally announced on March 4 its pick for a supplier of extra gas, and the choice is longtime partner, Azerbaijan. The decision appears to knock both Iran and Russia’s state-run Gazprom out of the running, but still leaves the door open to collaboration between all four countries in other energy spheres.

“We’re glad that the talks ended with success and that we’ve made it to a decision that will deepen our strategic partnership [with Azerbaijan] even more, about which not a single doubt ever existed,” a contented Georgian Prime Minister Giorgi Kvirikashvili declared at a meeting in Tbilisi with Rovnag Abdualayev, president of the State Oil Company of the Azerbaijani Republic (SOCAR). Related: Saudis Turn To Capital Markets For $10 Billion Loan

Abdullayev, in turn, underlined that SOCAR “will continue its support for Georgia’s government;” in particular, by shelling out “various forms of investment” into the country.

The total amount of this “investment” — conceivably, a deal sweetener — is not known, but Georgia did manage to squeeze Azerbaijan’s commercial gas prices down a notch, from $318 to approximately $278-$283 per 1,000 cubic meters. It will receive an additional 500 million cubic meters of gas per year, an amount which Energy Minister Kakha Kaladze now claims “satisfies the market” demand.

That established, Tbilisi appears ready to call it a day with its gassy flirtation with the Russian energy-giant Gazprom. Gone is any talk about the advantages of “diversification” away from Azerbaijan, the source of most of Georgia's gas.

While the talks with Gazprom aren’t yet finished, Kaladze told reporters on March 4, the Georgian government’s “final proposal” to Gazprom is that the two sides leave things as they are — a 10-percent annual cut for Georgia out of Russia’s gas shipments to neighboring Armenia. No date has been announced for the next Gazprom rendez-vous. Related: Anadarko Slashes 80% Of Onshore Rigs, To Lay Off 95% Of Contractors

But nor will Tbilisi be linking up with Iran on gas. While Iranian gas purchases are “theoretically” possible, Kaladze stated, “today the necessity [for that] does not exist.”

So far, no sign of hard feelings. The spurred Gazprom and National Iranian Gas Export Company have not commented. Armenia, which enjoyed a brief run of celebrity as a possible energy-transit country for gas-shipments to Georgia from Iran, also has not made any remark.

Domestic critics of the Georgian government, though, don’t entirely buy it that Gazprom is now off the table. The various lines used by the government to justify its earlier talks with Gazprom made one opposition MP believe that Kaladze was just “throwing ash” in the public’s eyes. Another anti-Gazprom protest has been scheduled for March 6 in Tbilisi. Related: U.S. Has Too Much Oil. So Why Are Imports Rising?

But some players are already on to the next big thing. Iranian Energy Minister Hamid Chitchian, for one, is looking forward to an electricity exchange between Iran, Azerbaijan, Georgia and Russia, with Iran exporting power in winter, and importing in summer. “This way we could all decrease construction costs for . . . new power plants,” the state-run Iranian news agency Fars quoted him as saying.

What goes for Azerbaijan, also goes for foe Armenia. Last December, Georgia, Russia and Iran penned a deal with Yerevan about a similar power-trade.

So, don’t expect this energy drama to end anytime soon.

By Eurasianet

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