EurasiaNet Eurasia Insight - Gas Crisis Over, Georgia Vows to Diversify Energy Supplies

EURASIA INSIGHT

GAS CRISIS OVER, GEORGIA VOWS TO DIVERSIFY ENERGY SUPPLIES
Diana Petriashvili 1/31/06

Georgia’s gas crisis has come to an end, with the government vowing to diversify energy supplies away from Russia and calling for fresh investments in the energy sector to help the country realize that goal.

Russian gas began to flow again to Georgia on January 29 after completion of repairs to two damaged pipelines supplying the South Caucasus state and Armenia. Gas has now been partially restored to the capital, Tbilisi, and to the key regional cities of Kutaisi, Gori and Rustavi. Officials estimate that within one week all of Georgia will have normal gas supplies.

But despite the improvement, the government’s bitterness at Russia for allegedly imposing an "energy blockade" on Georgia will not fade soon.

In remarks televised on January 30 on the Rustavi-2 television station, Georgian Energy Minister Nika Gelauri charged that Russia had accelerated the repair work "only after we announced plans for importing Iranian gas."

Iranian gas started flowing into Georgian pipelines, via Azerbaijan, for the first time in 35 years on January 30. Depending on supplies from Russia, Georgia will receive Iranian gas for either 15 days or a month, Gelauri said Monday at the Marneuli gas distribution station south of Tbilisi. The Iranian news agency IRNA has reported that the Persian Gulf state will supply Georgia with 30 million cubic meters of gas over the course of a month.

Although government officials have refrained from saying how much Georgia will pay for the gas, Gelauri suggested that the deal with Tehran, concluded just four days ago, could continue for some time to come. "In the future, we can use this alternative gas in case of any problems with [Russian] gas supplies," he said.

Presently, Georgia receives gas from Russia, Azerbaijan and Iran to meet its daily consumption of 7 million cubic meters.

Georgian Prime Minister Zurab Noghaideli stated on January 30 that Iranian gas would help Georgia avoid a supply crunch like the one that paralyzed the country after the two pipelines that feed gas from Russia exploded on January 22. "The start of Iranian gas flowing to Georgia means that if similar [problems] occur in the future, we will receive gas from alternative sources," Noghaideli said.

Nonetheless, some local analysts see risks for Georgia in an Iranian gas partnership. In a recent op-ed in the daily newspaper Resonansi (Resonance), energy expert Gia Khukhashvili wrote that close cooperation between Tbilisi and Tehran could spark doubts about Georgia’s pro-Western orientation and irritate strategic partners such as the United States.

One expert, however, countered that such short-term cooperation in the energy field is understandable, given Georgia’s gas crisis. "It is a temporary measure. Any country that would appear in a position like this, would act in the same manner," said Giorgi Khelashvili, a professor of social sciences at Tbilisi State University.

Few alternatives exist for Georgia’s energy supplies, making the country’s future energy strategy "a complicated issue," Khelashvili continued. "It is impossible to rely on Russian supplies; but nor is Iranian gas a solution [due to the country’s disputes with the international community over its nuclear research program]."

The Iranian gas deal and additional supplies pumped from neighboring Azerbaijan are just the start of a diversified gas supply for Georgia, President Mikheil Saakashvili stressed in a January 31 televised speech to the nation. "[F]or the first time since its independence, Georgia is not being supplied with only Russian gas. It is the first time that we have alternative gas. And we will continue working in this direction," Saakashvili said. "As the share of Russian gas decreases, there will be fewer attempts to carry out acts of sabotage or to manipulate [gas] prices."

Among the perspectives for international investments in the Georgian energy sector, the president continued, is an international tender for hydropower plants "[so that] Georgia will be able to take care of its own need for electricity." The tender, he added, would occur by 2009, the last year of Saakashvili’s presidential term.

Another large-scale proposed energy project � the purchase of Georgia’s main gas pipeline by Russian energy giant GazProm � appears to have been quietly shelved. When the gas crisis struck, opposition members demanded the resignation of the project’s most outspoken proponent, State Minister for Economic and Structural Reforms Kakha Bendukidze, for supposedly kowtowing to Russian interests, but Tbilisi State University’s Khelashvili said that he doubted Bendukidze would now be asked to leave government.

"His economic position is rather liberal, but it is doubtful that Bendukidze fulfills the strategic interests of Russia," Khelashvili said. The question of privatizing Georgia’s main gas pipeline will again appear on the agenda, he added, "but it will be now more difficult [for Bendukidze] to propose it."

Meanwhile, relations with Russia remain decidedly chilly. On January 28, Tbilisi Mayor Gigi Ugalava, former chief of staff to President Mikheil Saakashvili, ordered that gas and electricity supplies be cut to the Russian embassy and GazExport, the export arm of Russian gas supplier GazProm, in retaliation for the alleged "energy blockade." After the Russian foreign ministry protested the move, power and heat was restored to the building, but the Georgian embassy in Moscow lost gas and power on January 30 in what Russian officials described as a failure of the local electricity network.

At a January 31 press conference in the Kremlin, Russian President Vladimir Putin remonstrated with Georgia for accusing Russia of deliberately sabotaging the country’s gas supply. While Russian specialists worked "day and night" in freezing temperatures to repair the pipeline, Georgian government officials "only spit at us," Putin said, media services reported. The worsening of relations "will not improve the situation of rank-and-file citizens," Putin said, adding that "Georgian authorities bear the responsibility for that." Putin termed the pipelines "a good bridge" for improving relations with Georgia, however.

In a televised speech to the nation on January 31, Saakashvili, however, gave little indication that Tbilisi is willing to accept Russia’s arguments. The Georgian leader described the January 22 explosions as aimed at "demoralizing" the Georgian population and at "the total collapse of the [energy] system."

"But we have seen the exact opposite of this," he continued, adding that the government and energy specialists had allowed Georgia to overcome the crisis quickly.

Editor�s Note: Diana Petriashvili is a freelance writer based in Tbilisi.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

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