Georgia and Gazprom Agree on New Deal for Gas Transit to Armenia

TBILISI — The government of Georgia has agreed to sign a two-year deal with Russian Gazprom Export on new terms of the transit through Georgia of Russian natural gas delivered to Armenia, it was announced on Wednesday

Georgian energy minister Kakha Kaladze, who negotiated the deal with Gazprom Export executives yesterday in Minsk, Belarus, told Georgian reporters upon his arrival in Tbilisi that as a result of several rounds of talks the sides reached ‘the best option.’ He said the agreement will not increase Georgia’s dependence on Russian energy resources.

“Gas consumption in Georgia is rising and we will be able to buy, if necessary, [Russian] gas for $185, rather than $215, per thousand cubic meters,” Kaladze was reported to tell journalists.

Georgia currently buys the bulk of its natural gas from Azerbaijan. Over the past year, the Georgian government has signaled its desire to ease the country’s dependence on Azerbaijani gas.

Armenia imports roughly 2 billion cubic meters of Russian gas annually, meeting more than 80 percent of its demand for the energy resource. Transit fees charged by Georgia have until now taken the form of free Russian gas equivalent to 10 percent of that supply volume.

The Russian gas price for Armenia currently stands at $150 per thousand cubic meters. It did not go down after Armenian utility regulators approved in November a sizable reduction in the domestic gas prices. The price cuts were requested by Gazprom-Armenia, the country’s Russian-owned gas distribution network.

Gazprom-Armenia’s chief executive, Hrant Tadevosian, said the company hopes to make up for an anticipated loss in revenue through cost saving and greater consumption expected as a result of cheaper gas. Tadevosian also said the Armenian gas operator will save more money if Georgia agrees to lower its transit fees. “We expect those figures to be significant,” he said.