Georgia expanses its transit powers

Extraordinary and Plenipotentiary Ambassador of Georgia in the Republic of Azerbaijan, Mr. Zurab Gumberidze.

- Mr. Ambassador, how do you estimate today's level of relations between Azerbaijan and Georgia?

- Today, there was achieved serious progress in relations between Azerbaijan and Georgia. It regards economy, political, cultural and humanitarian spheres.

As you aware, regarding economy sphere, there are realized our long-term projects: the construction of Baku-Tbilisi-Ceyhan (BTC) and Baku-Tbilisi-Erzurum (BTE) pipelines, and Baku-Supsa oil pipeline operates successfully.

I think the most important for last two years became active work of Azerbaijan-Georgian intergovernmental commissions on economy relations headed by Prime Minister, Mr. Zurab Nogaideli from Georgia and the first vice-premier, Mr. Abbas Abbasov from Azerbaijan. Two successful conferences are over where opened and considered in detail all aspects of our cooperation in the sphere of economy. These are energy problems, probable cooperation and integration projects, the problems are connected with citizens' moving through the border and other appearing problems, including humanitarian matters too. At the same time, there is fulfilled the process of stated decisions and planned matters' execution. So, we can say that both parties' active control the execution of above stated issues will be possible. Principally, the matters that can be interested to both sides a lot. Concerning political then our countries have achieved very high level of entrust, cooperation, relations, beginning from states' leaders, among all structures operating in this field.

As you aware, we realize interesting projects in humanitarian and culture fields, in particular regarding burning Azerbaijan theatre in Georgia and Georgian theatre in Azerbaijan. Of course, there are exists some problems in both sides. So, we try to solve them fast for providing with opportunity to make active our relations. I think that we should fulfill many interesting things.

You reminded about problems, and, which problems are main and how are they being solved practically?

- I do not see such kind of big problems. This is true that the matters are being solved on the base of bilateral relations. The most important problems at present is reconstruction of existed gas pipelines (from Azerbaijan Caucasus to Georgian Saguran) for providing with gas Georgia. This is the main task for guaranteed and stable provision of Georgia with energy carriers. Georgia pay attention to it and presently, implements active consultations regarding probable agreement of gas pipeline working in emergence operation or in regime of minimal gas supplies providing for provision's stability. We know that Azerbaijan feels deficit in natural gas, imports big volume gas but stated matter is being discussed.

At the same time, there is discussed the working possibility of two energy systems in parallel regime. By the other words we speak about strategy planning, cooperation project of two energy systems, i.e. the possibilities to work in parallel regime, technical assistance rendering opportunities, transit projects' implementation and so on.

It is necessary to make balance the energy potential of both Azerbaijan and Georgia. This is the best variant when there is possibility to balance the operation of hydro power stations and heating power stations as it was in Union state. As it is aware, Inguri HPS was aimed for providing with power energy during peak times and Azerbaijan HPS were aimed as basic power stations. Today when Georgia uses Inguri HPS as basic power station in November we found ourselves ahead the fact - there is no water. Therefore it is necessary to balance the peak and basic power energy providing between two states. And this is more acceptable variant to operation. In this case we will be able to get transit potential. South countries like Iran or Turkey is possible too.

Taking into account that Georgia will get a gas from Baku-Tbilisi-Erzurum gas pipeline, do you plan to begin the full import of Azerbaijan gas in future?

- I think that there is never stood such kind of task. Certainly, we expects the completion of "Shah Daniz" project that will permit to receive gas on behalf of Georgia on the base of two existed contracts. As you aware, the first contract is the volume of gas that Georgia receives free of charge as a transit payment (depend on volume of passed gas - 5%). The second contract is additional volume maximum 1,5 bn of gas a year during 15 years. In stipulated price are taking into consideration inflation processes and other changeable parameters too. Presently, there is observed in Georgia serious dynamic of economy growth and the perspectives of new units that will use natural gas and so, it does not exclude significant growth of demands in natural gas. In this connection, we have appealed to Azerbaijan side and asked them to consider opportunities of new contract's concluding for additional gas volumes' supplying to Georgia. The proposal is considered both by shareholders of "Shah Daniz" project and Azerbaijan side. At present, there exists an agreement between us that under possibility the matter will be considered.

As I have already mentioned, there is also exist the possibility of gas supplying from Azerbaijan via old gas pipeline. It has almost been fully reconstructed in Azerbaijan. Now, the matter in technical connecting of gas pipeline with Georgian network and getting minimal gas volumes for its operating. Therefore, first of all we would like to make it good from technical point of view. This is a task as alternative in case of accident in the North gas pipeline, therefore we have already appealed to Azerbaijan side regarding possibility of gas supplies in little volumes, approximately 200-300 mln. cu. m. a year. Previously, this gas pipeline was used not only for transit of the Russian gas through Azerbaijan to Georgia but also as transit gas pipeline via Georgia to Azerbaijan. Thus from technical point of view stated pipeline can be acceptable both to Azerbaijan and Georgia sides. It is able to accept up to 3 mln. cu. m. of gas daily.

How Georgia does plan to pay for natural gas in future?

- We guess that stable guarantee of solvency in banks with high rating, i.e. providing with solvency guarantee. It is necessary to note that we provides the transparency of stated gas using on those projects which we are going to realize and the process will make sure the suppliers not only in solvency but also in real realization of these projects.

Presently, oil via Baku-Tbilisi-Ceyhan oil pipeline passed Azerbaijan-Georgian border…

- You are right, during the first half of October of 2005 we plan to celebrate the filling of the Georgian part of BTC. The ceremony will be held for commissioning of pipeline in Georgia.

During laying the route there were solved global matters, they were historical. At the same time, there is fulfilled the political operation - at the level of states' leaders that supported the project and contributed to fast moving through bureaucratic labyrinths.

Soon, Kazakhstan should connect to BTC…

- My opinion regarding it is very optimistic and think that Kazakhstan will connect to BTC. I mean that both the implementation of stated connection and oil transit from Kazakhstan to Azerbaijan, and oil volumes which will be supplied via BTC. I am also sure that Kazakhstan's oil will move by existed railways, which actively operate during last 10 years.

Now, we observe the serious increasing of crude oil transit volumes that is transported by Baku-Batumi railway.

As you aware, approximately during the first half of (March-April) 2006, there opened the largest oil terminal in Kulevi (north part of the Black Sea coastal) and it will allow to our corridor to get new opportunities on pushing up the transit volumes' potential and increasing the volumes of crude oil, which will be transported via our corridor. In the given case the speech about terminal's capacity from 10 to 20 mln. tons of oil a year. Terminal is built as accumulative and it's volumes should be large. So, we would like new volumes that can be appeared had an opportunity to move through our corridor and there were not any delays. Regarding the railway network to terminal then it has already existed. Now, transit oil is supplied by railway via Azerbaijan to Georgia and the oil mainly Kazakhstan's.

So, is there stimulated the competition of railway routes aimed for oil export?

- Kulevi route is not competitive to any existed route regarding oil volumes and it's volumes increase. There is a time when it became impossible to believe that oil transshipment via Georgia will permit to increase the volume of supplied oil. After detail analyze became clear that these routes complete each other, expanse the transit possibilities and can be competitive only at service level, qualitative service, prices, etc. So, there will be created commercial relations and user will define himself which terminal he can use.

What about problems in Bosphorus?

- The speech about that new terminals' opportunities were aimed to new routes as it called "north". Everything will depend on economy of these projects. I.e. if economy is aimed to north routes then they will operate in the North routes such as European - via Ukraine, other neighbour nations via Black Sea.

Did new opportunities aim to filling of Odessa-Brody?

- There is no such direct relation at level of agreements and contracts. But theoretically it does not exclude the using of such possibility. At present, we will look for additional oil on measure of BTC filling that will reduce our transit potential by railway. Azerbaijan and Georgia are interested in it.

When we talk about extra oil, we mean extra volumes that will be sent to Ceyhan. The matter is that according to BTC project the negotiation are conducted regarding fixed volumes' of Kazakhstan's oil pumping. And other oils that are not able to enter BTC from Kazakhstan because of their quality or small producers are not interested to investors we invite them and strive to create acceptable conditions for them for the sake of their using the existed during centuries built corridors. And permit them to fulfill transit.

Is it possible to suppose that the powers will be expanded in Baku too?

- I do not think that existed powers in Baku had already been exhausted. Did anybody say that existed powers had already been exhausted? If there is necessary then the construction of additional terminal will not be a problem. There will be appeared health competitive under possibility of corridor's transit potential increasing. If there are many terminals and transit productions then it does not exclude that it will reflect to capacity of the corridor with benefit.

Is there being considered the matter of Novorossiysk-Supsa-Ceyhan oil pipeline construction for making easy the movement via Turkish straits?

- The matter was being considered. I cannot say that the project found its solving but in any case Russian connection to our transit opportunities is positively considered by me. It will be the reason for improvement the relations between two countries in the sphere of policy.

Thanks for your interview.