| General Director of Gazexport Alexander Medvedev officially confirmed yesterday that his company fully meets the gas needs of the Transcaucasian republics. Itera, which under contracts with Georgia, Armenia and Azerbaijan should provide them with about 50% of the required volume this year, was unable to agree with Gazprom on gas transportation. There is still no place in the transport system for the Turkmen gas contracted by this company, and the parties have not found another mutually beneficial supply scheme. Therefore, Gazexport’s contracts with the states of Transcaucasia have already been revised upward. At the same time, the export subsidiary lost most of the market won from Itera to the Russian-Kazakh joint venture Kazrosgaz, which will meet the needs of Azerbaijan.
As you know, Itera until recently single-handedly supplied Turkmen gas to Transcaucasia. But last year, as soon as Gazprom gained some gas from Central Asia into its portfolio, it began to squeeze Itera in Georgia, Armenia and Azerbaijan. Already at the beginning of January this year, due to a shortage of transport capacity on the Uzbek section of the Central Asia-Center gas pipeline, Itera lost the right to supply gas to Transcaucasia. Despite its contractual obligations to Tbilisi, Yerevan and Baku with a total volume of up to 4 billion cubic meters in 2004, now the needs of these republics are fully met by Gazexport.
According to Mr. Medvedev, an additional agreement has already been signed with Azerbaijan, which provides for the expansion of Gazexport’s obligations to this country from 2.75 to 4.5 billion cubic meters. At the same time, the annual demand of the Azerbaijani market for imported gas is about 6 billion cubic meters. “We agreed in advance that if Itera is unable to supply gas to the republic, Gazprom will take on 100 percent obligations,” he said. In Armenia, already when signing a contract for 700 million cubic meters, Gazexport and Armrosgazprom stipulated the possibility of providing Itera’s share (of the same volume).
Having ousted Itera from the Transcaucasian markets, Gazprom allowed Kazrosgaz into the market, which it owns on a parity basis with the Kazakh state corporation Kazmunaigas. The joint venture purchases gas from the Karachaganak field, processes it at the Orenburg gas processing plant owned by Gazprom, and exports it through the monopoly’s subsidiary. In particular, Kazrosgaz will fully implement the Azerbaijani contract of Gazexport. A source at Gazprom explained this decision primarily by the fact that additional supplies were not provided for in the approved gas balance. Alexey GRIVACHS
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