Bad gas

Tbilisi and Washington disagree on natural gas purchases from Iran

Washington, it seems, will have to sacrifice principles and turn a blind eye to the cooperation of “brotherly” Georgia with “terrible” Iran . The discussion between American diplomats about whether Tbilisi should be “allowed” to buy gas from the Mahmoud Ahmadinejad regime was interrupted yesterday by Georgian Prime Minister Zurab Nogaideli. “We will buy gas from Iran, there is no other opinion,” RIA Novosti quotes him as saying. “Moreover,” added Mr. Nogaideli, “we will exchange Iranian gas for our electricity.”

The United States, exercising “political patronage” over Tbilisi, has unexpectedly made it difficult for Georgia to prepare for winter, which, due to the lack of agreements with Gazprom, promises Georgians many energy problems. On Monday, Americans for the first time openly spoke out against cooperation in the gas sector between Georgia and Iran. Meanwhile, Tehran is seen in Tbilisi as perhaps the main alternative to Russian energy supplies.

US Ambassador to Georgia John Tefft, in an interview with the Tbilisi weekly Kviris Palitra, said that the US reacted “with understanding” to Georgia’s forced purchases of gas from Iran in January-February of this year under force majeure circumstances after the explosion of the gas pipeline through which Russian gas is supplied. Then, according to the diplomat, “the population faced the threat of freezing.” In those days, Georgia purchased Iranian gas at a price of $230 per thousand cubic meters - the same price offered by Gazprom for 2007 instead of the current $110.

However, now, John Tefft believes, “long-term, strategic cooperation” between Georgia and Iran in the gas sector is “unacceptable” for the United States. The ambassador suggested that Georgia rely more on gas from the Azerbaijani Shah Deniz field and its own hydropower resources.

“I don’t know what the US Ambassador said, but US Deputy Secretary of State Matthew Bryza was in Tbilisi the other day and said that the US does not object to the Georgian government purchasing Iranian gas,” Prime Minister Nogaideli said yesterday.

Assistant Secretary of State for Caucasus and Southern European Affairs Matthew Bryza, while on a visit to Georgia, said the following at a press conference in Tbilisi on November 17: “Georgia and the United States have such close relations that the issue of Georgian-Iranian cooperation on the supply of Iranian gas to Georgia cannot influence them. We welcome Georgia's desire to find alternative (to Russian - Ed. ) sources of gas supplies. We have our own policy with Iran, but Georgia can look for partners on its own and make its own choice.”

Ambassador Tefft, however, claims in an interview that “Matthew Bryza’s statement was misinterpreted.”

At the end of last week, representatives of the Georgian government said that the next meeting of the Georgian-Iranian commission on economic cooperation would take place in December, after which it was planned to sign an agreement on gas supplies. It was not specified whether this agreement would be “long-term and strategic.” Obviously, this event is now in doubt. However, even before there were doubts about the possibility of a stable, at least throughout the year, gas supply to Georgia with Iranian gas in the required volumes (1.5 billion cubic meters). There is simply no necessary infrastructure for this.

Obviously, it would be most convenient to resolve political misunderstandings, and at the same time the problem of gas purchases, with the help of Azerbaijan. This coming Thursday, Zurab Nogaideli, together with the Minister of Fuel and Energy of Georgia, will visit Baku to find some gas. However, the Azerbaijanis also have serious difficulties with the gas balance. Currently, SOCAR purchases 4-4.5 billion cubic meters per year from Gazprom for supplies to power plants. The Russian concern announced an increase in prices for Baku from January 1 to the same $230 and reduced the possible level of purchases to 1.5 billion cubic meters. Thus, the gas that Azerbaijan was going to export to Georgia and Turkey will now have to remain in the country.

As is known, a consortium led by British BP is developing a large offshore field in the Caspian Sea, Shah Deniz. Gas volumes were contracted by Turkey, and deliveries were supposed to start at the end of September. However, the buyer, the state-owned company Botas, is not yet ready to accept gas, since the infrastructure has not been built on Turkish territory. Azerbaijani sources of Vremya Novostei say that the start of production has now been shifted to at least the beginning of December.

By the end of the year, it was planned to export 1.2 billion cubic meters of gas from the Shah Deniz field. And next year, increase exports to 2 billion. According to the transit agreement, Tbilisi was supposed to receive 5% of the transported gas in kind and could buy the same amount at a preferential price of $55 per thousand cubic meters. Now even these volumes are in question - Azerbaijan itself needs gas.

The Georgian authorities tried to take advantage of the situation and buy part of the 1.2 billion cubic meters of gas that Türkiye refused this fall (the figure was even mentioned - 450 million cubic meters). However, there are difficulties here too - no one is going to sell it cheap. In addition, now there is no special need for these volumes (Russian gas continues to be supplied at $110), and there are no storage facilities to store the volumes, for example, for the winter, either in Georgia or Azerbaijan.

Does all this mean that Georgia will be forced to become more accommodating in negotiations with Gazprom? In mid-November in Strasbourg, Georgian President Mikheil Saakashvili said that he did not know why his country should pay $230 per thousand cubic meters of gas, while Russia was ready to supply it to other countries for $110 or even cheaper. According to him, Georgia does not intendto purchase gas from Russia at a “non-commercial” price . “We need 1.5 billion cubic meters of gas this winter,” said Mikheil Saakashvili in the European Parliament. “We will try to avoid the political cost.”

“Our government must assume the worst - that we will not be able to purchase a single cubic meter from Russia,” Zviad Dzidziguri, a member of the Georgian parliament from the opposition Democratic Front, told Vremya Novostei. — As for who to buy gas from and whether to listen to US advice, we must first of all think about our own interests and how to warm our own people. If the Americans are against gas purchases from Iran, then let them offer Georgia their own realistic plan on what to do.”

According to Vremya Novostey, Georgian representatives did not conduct any negotiations with Gazprom after they announced the new price.

Mikhail VIGNANSKY, Tbilisi, Ivan GORDEEV