Georgia turns to Iran for emergency gas after Russian supply cut

Dubai (Platts)--22Jan2006

Georgia will soon start receiving natural gas from Azerbaijan and is
seeking emergency gas from Iran after an explosion on a pipeline in the
Caucasian region cut its main gas supply from Russian Gazprom, leading the
Georgian president to accuse Moscow of turning the gas off deliberately.
     A spokesman for the Russian gas giant responded by saying that the
company was working hard to restore supply to Georgia and Armenia, which was
also left short in sub-freezing temperatures, adding the issue should not be
"politicized."
     "Gazprom is taking all necessary measures to restore gas supplies along
this route in the shortest possible time," Sergey Kupriyanov, press secretary
of Gazprom's board, was quoted as saying by RIA Novosti, as monitored by the
BBC.
    But he added that Gazprom officials were surprised at what he said were
emotional statements from some media.
     Gas supplies to Georgia and Armenia were suspended earlier Sunday after
explosions on the Northern Caucasus-Transcaucasus and Mozdok-Tbilisi main
gaspipelines, the Russian Emergencies ministry said earlier, adding that
theblast had caused a fire.
    "Supplies of natural gas by pipeline to Georgia and Armenia have been
cut. Russian consumers have not been affected. Causes of the explosions are
being investigated," said a ministry official in the RIA Novosti report
monitored by the BBC.
    Georgian Public Television Channel 1, also monitored by the BBC, said
Georgia would import electricity and gas from Turkey and Azerbaijan. It quoted
Prime Minister Zurab Noghaideli as saying that the main 1,800 mm gas pipeline
would be repaied by Jan 25 but it would take several weeks to repair the
damaged 700 mm spur line and 20 days to fix the Kavkasioni power line, where
two pylons have been damaged. 
     "In a few hours Georgia will begin receiving gas from Azerbaijan. That is
very important and it will allow us to slowly begin re-supplying first of all
people's homes and then, if we can, power stations, and then factories. That
will be the order and the amount of gas we can technically receive will
determine whether we can supply them," Noghaideli said.
     He said Armenia, which also lost gas and electricity supplies, could no
longer supply electricity to Georgia from its power stations. 
     "It is also very important that on the president's instructions we have
had talks with Azerbaijan on emergency supplies of gas and we are also holding
talks with other countries, specifically with Iran, on supplying gas. In
technical terms everything is in order and once these talks have been
completed we will also be able to receive gas from other sources. That is
the situation," the Georgian prime minister said.
     Although Georgia has some indigenous gasfields, at present it is totally
dependent on Russian gas for both domestic power and heating. The
appalling condition of the main TransCaucasus gasline from Russia has
been highly controversial for several years and both Georgia and Armenia
are engaged in major projects to reduce their dependence on Russian gas
supplies. 
     The biggest such project, the new 8-bil cu. m/yr capacity South Caucasus
gas pipeline from Azerbaijan to Turkey, which passes near the Georgian capital
of Tbilisi, is nearing completion with most pipelaying finished and with
actual gas deliveries to Georgia and Turkey due to start next September. This
line will eventually provide Georgia with around 800-mil cu.m/yr of as a year,
around over two-thirds of its routine consumption.
     Azerbaijan's emergency supplies to Georgia are expected to be delivered
via a limited capacity Soviet-era line.
     Iran has already started delivering pipe for its new 2.8-bil cu.m gasline
to Armenia, which would be capable of fulfilling all Armenia's supply
requirements once it is up and running, but this is not expected to be
until mid-2007.
     Iran, which has the world's second biggest gas reserves after Russia, has
also offered to supply Georgia via this line.
     Armenia recently courted Russian disapproval by agreeing to accept
$170-mil in Iranian financing for the new fifth unit at the Hrazdan
thermal power plant, which would be supplied with Iranian gas. Russia's
RAO UES owns and operates the existing four-unit plant at Hrazdan.
    Russian control of current energy installations and what are seen as
efforts to secure control over Georgia's internal gas distribution
system was a significant factor in the Rose revolution which brought
President Mikhail Saakashvili to power in November 2003 and remains a
key issue in Georgian politics.
     Today Saakashvili accused Russia of deliberately cutting off gas
supplies to his country, which was currently in the middle of its
coldest winter for 20 years.
     Saakashvili told the BBC that the gas pipeline was blown up in "an area
fully under Russian control... with a heavy presence of Russian border
guards", where there were no local insurgents. The explosions, he said,
"happened at the same time, and basically they didn't affect supplies to
Russia proper, so we can conclude that it was a very well-organised and very
well co-ordinated act."
     He also said: "As a provider of energy Russia remains unreliable,
unpredictable," adding: "We've received numerous threats by Russian
politicians and officials at different levels to punish us for basically
for not giving them pipelines."
     The Russian foreign ministry issued a statement describing the Georgian
reaction as "hysteria." Moscow's Ekho Moskvy radio quoted Konstantin Zatulin,
head of the State Duma Committee on the Commonwealth of Independent States
[and Relations with Compatriots], as saying Saakashvili should provide
evidence of his accusations, which he said were lies. 
     "If Mr Saakashvili knows better than us why those ... pipelines
exploded, let him provide evidence. If he does not provide evidence, then he
is simply a liar and, in addition, one of a rather low calibre, a kind of a
propaganda man, who without any evidence accuses the whole country of
harbouring some kind of evil intents against Georgia. I think that we should
ask for explanations from Mr Saakashvili and from the Georgian ambassador to
Russia," said Zatulin.

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