Georgia-SOCAR gas deal ends country’s gas deficit woes

Georgia will overcome its natural gas supply deficit thanks to a new deal with Azerbaijani’s national oil company SOCAR.

From now until 2030 Georgia will receive an additional 500 million m3 of natural gas from SOCAR, bringing the amount it receives from 800 million to 1.3 billion m3 per year.

The Georgian side said the extra gas will help the country fill its gas deficit during winter.

Today, three days after announcing the deal, Georgia’s Energy Minister Kakha Kaladze and SOCAR president Rovnag Abdullayev resigned a Memorandum agreed between the countries in December 2011.

We signed an agreement with our strategic partner, which will ensure the supply of gas to Georgia and satisfy the market,” said Kaladze.

In addition to the extra gas the Azerbaijani company will decrease the price of gas sold at petrol stations in Georgia.

Georgia will also receive natural gas from the Shah-Denis gas field and "the country will not face any technical problems regarding receiving gas from Azerbaijan”, read a press release from Georgia’s Energy Ministry.

We are glad the negotiations [with SOCAR] ended successfully. Our strategic partnership will deepen further … [and] we are glad SOCAR now has the technical possibility to supply Georgia with more gas,” said Georgia’s Prime Minister Giorgi Kvirikashvili after meeting Abdullayev today.

Since 2012 Georgia has increased its natural gas consumption by almost 40 percent, and this caused the gas supply deficit in the country. To address this issue, the Georgian Government searched for ways for energy diversification; one of which involved negotiating with Azerbaijan and Iran to import more natural gas.

Once the agreement was reached to increase gas supply from Azerbaijan Georgia’s Energy Minister said there was no need to import natural gas from Iran.

The Georgian side launched negotiations with Iran as there were some technical problems regarding the import of natural gas from Azerbaijan. We had a meeting [with the Iranian side]. We talked about the possibility of importing gas from Iran. It is theoretically possible but there is no need for it today,” Kaladze said.

At the same time Georgia was also negotiating with Russian energy giant Gazprom to renew its annual contract of gas exchange.

As of today negotiations with Gazprom are not completed and therefore no agreement is signed, however Kaladze offered Gazprom to continue the old contract.

The old contract outlined Georgia could receive 10 percent of the gas Russia exported to Armenia via Georgia. However Gazprom offered Georgia to pay for the pipeline use instead of offering gas. Georgia refused this proposal as the natural gas was more important for the country and especially when Georgia faced the gas supply deficit.

We have recently sent our last offer to them. We offered them to stay under the old contract. Namely, we want to receive 10 percent raw natural gas,” said Kaladze today.

It is not known when the next meeting with Gazprom will be held.