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12.12.2015 13:52

GEORGIA ENERGY MINISTRY CLARIFIES SITUATION WITH SOURCES OF GAS FOR COUNTRY

Deputy Energy Minister Mariam Valishvili of Georgia has responded to the request of the parliamentary faction "Republicans" about the sources of provision of gas for Georgia.

The press published Valishvilis statement that approximately 92% of gas supply of Georgia is provided by Azerbaijan via two pipelines, and the remaining 8% is received from Russia via North-South pipeline. The price of social gas supplied today is $120 per 1,000 cu m, while for thermal power plants it makes $143. The price of gas received within various contracts for social segment is a commercial secret, but the average price of deliveries to commercial consumers is within $260.

"The demand in the commercial sector is met by the State Oil Company of Azerbaijan (SOCAR) within the framework of bilateral agreements concluded with business customers, and demand of so-called social segment (the population and thermal power plants) is met within the long-term contract between the government of Georgia and SOCAR signed in 2009," the deputy minister said.

The main source of the so-called social gas (1.35 bn cu m in 2015) are long-term agreements signed with the Shah Deniz consortium (5% of volume carried by the South Caucasus pipeline and 500 million cu m of additional volume, together about 750 million cu m). There is also volume of natural gas within the 200 million cu m, received as a result of transit through Georgia to Armenia, and filling the remaining volume was provided by the above-mentioned contract with SOCAR.

In the joint energy balance of Georgia the share of natural gas is about 40%. In 2015, the demand for natural gas reached 2.4 bn cu m. In the total consumption 28% of gas consumption accounts for the population, 27% for thermal power plants, and the remaining 43% for the commercial sector.

"If the reason for termination of gas supply to Georgia is the accident at the Shah Deniz field or pipelines, then such issues are solved within agreemetns and are balanced efficiently from other existing sources. Long-term cessation of gas supplies from Azerbaijan is scarcely probable, Valishvili said.

She specified that "in the short-term prospect Georgia has not other source, except Russia. Gas supply from Iran is also possible, for example, small volumes of gas were delivered from there in 2006, if, of course, adequate infrastructure is available. In this regard, it is important to examine the prospects of supplying Iranian gas to Western markets from angle of use of the transit potential of Georgia".

With regard to ongoing international projects, "project of expansion of South Caucasus pipeline envisages an increase in the volumes of gas transported from Shah Deniz up to 22 bn cu m a year.

"As a result, Georgia will have the opportunity to receive additionally the natural gas at a discounted price since 2019 (in case transit increases by 16 bn cu m) in the total volume of 800 million cu m, or 5% of the missed volume," the deputy minister said.

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