In the latest episode in one of the region’s longest-running geopolitical soap operas, Georgian Energy Minister Kakha Kaladze on April 12 announced that, as of this month, Georgia will look only to Azerbaijan for all its gas needs.
This may not hit as a major plot-development. Azerbaijan already supplies an estimated 90 percent of Georgia’s gas, with Russia’s state-run Gazprom finishing a distant second at some ten percent.
The larger significance for this all-Azerbaijan decision may lie in the future.
Kaladze’s declaration hit during a pow-wow of foreign ministers from Eurasian states partnered with the European Union, and from four Central European EU members (the Czech Republic, Hungary, Poland and Slovakia). Praise and pledges of support for the EU-backed Southern Corridor, a strategic gas route expected to start delivering Azerbaijani gas to the Gazprom-dependent EU by 2020, ran strong.
As one of the Corridor's hosts, Georgia, the region’s most enthusiastic EU-booster, of course, does its part to back Azerbaijan.
Two years ago, Energy Minister Kaladze predicted that Tbilisi would not look to Gazprom to top up its gas if, by 2018, Georgia would be able to buy an unspecified amount of “additional gas” from the second stage of Azerbaijan’s massive Shah Deniz energy project.
That said, he sounded far more pessimistic last year. Last year, the minister described Azerbaijan to Tamada Tales as a “virtual monopolist” in Georgia, but one without the infrastructure to increase supplies as needed. For this reason, he claimed, Tbilisi had to consider buying gas from Gazprom.
It later also dallied with Iran. Related: Novatek Aims To Dethrone Gazprom With Qatar Deal
But now, that’s all forgotten. There’s no hint of discomfort with Azerbaijan’s domination of the Georgian market or with its technical capabilities. Russia’s share of Georgia’s gas market will shrink to an estimated 4 percent – and that tally the result of allowing Russian gas to transit through Georgia en route to Armenia.
Gazprom will pay Georgia this year in both cash and gas for its use of Georgian territory as a transit to Armenia, and, then, next year in cash only. The Georgian government has not elaborated about the details, claiming its contract with the state-run company is a “corporate secret.”
Russian pro-government media does not appear bothered by the loss of market share, however. One energy expert blamed “politics” -- the Georgian opposition and others have bashed Kaladze for agreeing to take money from Gazprom while breakaway Abkhazia and South Ossetia remain under Russian occupation.
Other analysts attributed it all to springtime. Come winter, Georgia “‘will ‘freeze to death' without Russian gas,” a headline in the tabloid Moskovsky Komsomolets smugly predicted.
Not so long as they have a faithful pipeline-pal like Azerbaijan, Baku might well respond.
“We want to use our energy to make friends,” Azerbaijani presidential aide Elman Nasirov recently commented to Turkey’s state-run TRT World. “This is our vision of strategic balance.”
More Top Reads From Oilprice.com:
- Oil Prices Rally Amid Rising Rig Count
- Goldman’s $50 Forecast May Prove Bullish
- IEA: Oil Markets Are Balancing At A Rapid Pace