TODAY GEORGIA DOES NOT DEPEND ON ANY MONOPOLIST
Caspian Energy (CE): Mr. Khetaguri, how would you evaluate present energy partnership between Azerbaijan and Georgia?
Aleksander Khetaguri, President of Georgian Oil & Gas Corporation: Both overall and in particular energy cooperation between Georgia and Azerbaijan is based on the centuries-long friendship and good-neighbourhood relations between the countries supplemented by numerous common traditions and lifestyle of the nations. Georgia is a motherland of many famous people including those of Azeri origin. In its turn Baku has contributed much to the formation of the Georgian engineering potential, especially in late XIX - early XX centuries.
Azerbaijan has rich energy resources but, however, lacks for a direct entry to the international energy market. Due to this reason main gas and oil pipelines along with railway and sea ports located in the territory of Georgia are more suitable to export these resources. For comparison, Azerbaijan oil's transportation through the Baku-Novorossiysk route (Russia) is several times more expensive than its export via the territory of Georgia. In addition, at the Novorossiysk terminal high-quality Azerbaijan oil blends with petroleum of lower grade supplied from Russia and Kazakhstan and, to a great extent, downplays the market value. The route towards Iran and the Persian Gulf is even less advantageous as along with enhanced transportation costs caused by strong competition in the region, Azerbaijan oil would be sold at lower prices.
On the one hand Georgia lacks for energy resources, whereas on the other hand the country enjoys the favourable geographical location that suits well for oil/oil products and gas transportation from Azerbaijan to the world market.
The Baku-Supsa project that transports so-called early oil of Azerbaijan through Georgia has been in operation for several years. The Baku-Tbilisi-Ceyhan oil pipeline with the throughput capacity of 50 million tonnes a year or almost 2% of all world transit was commissioned last year.
Every year the Georgian railway delivers million tonnes of oil and oil products from Azerbaijan to the Black Sea ports and from there to end consumers. At the same time, Azerbaijan products hold the largest sector in the Georgian oil products market.
The startup of Azerbaijan's Shah Deniz field and Baku-Tbilisi-Erzurum gas pipeline is especially important as it will free our countries from the unilateral dependence upon Russian monopolists who very often use energy resources for political pressure. Further development of Shah Deniz field and the South Caucasian Pipeline system (SCP) will promote rapid enhancement of energy security of Azerbaijan and Georgia and deepening of their partnership relations.
With a sincere gratitude the Georgian nation highlights Azerbaijan's friendly assistance in the most critical situation when two main gas pipelines simultaneously exploded in the territory of Russia during the coldest period of winter 2006. Without disinterested aid of Azerbaijan the people would have faced a very heavy situation.
The same can be said about effective energy cooperation. Commercially expedient energy exchange is implemented through well-run high voltage transmission facilities connecting Azerbaijan and Georgia.
So, the general evaluation is as following: today Azerbaijan and Georgia are enjoying good-neighbourhood partnership relations based on economically beneficial principles, which can serve as an example of creation of such relations for other FSU countries.
CE: What will be the dynamics of gas consumption dynamics for Georgia? How will Georgia build up its gas import policy?
Aleksander Khetaguri: According to the existing forecasts, in future gas consumption in Georgia will grow and reach approximately 3 bcm by 2020. In his speech on January 31 the Georgian President said the country had decided to withhold development of technologies requiring intensive consumption of expensive imported gas. In energy resources, the major concern will be given to the local, primarily water-power resources, which economic potential has been developed at just 12-16%. Gas will be mainly used in communal and commercial sectors as the cheapest, available and simple in use fuel resource.
Diversified sources of gas supplies are the corner stone of the state gas import policy. Unlike previous years when Georgia was dependent upon one monopolist, today there are 3 independent gas main pipelines that deliver gas from Azerbaijan and Russia. We also have perspectives to develop gas at our own fields.
CE: How important are perspective supplies of Azerbaijan gas via the Baku-Tbilisi-Erzurum pipeline?
Aleksander Khetaguri: The development of the Shah Deniz field and the Baku-Tbilisi-Erzurum pipeline in particular are opening up very advantageous possibilities for Georgia. Gas volumes received in exchange for transit are consistently growing and promise to reach 300 million m3 a year by 2009. In addition, under existing contracts Georgia will get from 250 to 500 million m3 of gas a year within the next 20 years.
Enhanced import volumes will be feasible in case the Trans-Caspian pipeline is installed and Kazakh or Turkmen gas is delivered to international markets via the SCP system.
At the same time, if Azerbaijan increases gas production to the level enabling to create a certain export potential, our state will be ready to receive this gas on a commercial basis.
CE: How will Georgia build up its gas import policy in 2008 in case Turkey refuses to distribute its share in the BTE project?
Aleksander Khetaguri: As I have already stated above, the Georgia's gas import policy will be built up on the principle of diversified supplies on acceptable commercial conditions.
CE: Does Georgia plan to purchase Iranian gas through the territory of Azerbaijan in future? How are the talks on this issue proceeding?
Aleksander Khetaguri: If Georgia faces a necessity to purchase gas from Iran, the country will view the possibility of such supplies, however, only on acceptable commercial conditions.
CE: Does Georgia plan to develop the system of railway routes for oil transit?
Aleksander Khetaguri: At the moment railway routes for oil/oil products transportation from Azerbaijan and Central Asia to Georgian ports operate properly. As soon as construction of the Kulevsk Port, which has become a property of the Azerbaijan investors, is completed, the scope of the above-mentioned supplies will significantly grow. Extensive reconstruction and upgrading works are underway at the Georgian railroad. The agreement about construction of the Kars (Turkey) - Akhalkalaki (Georgia) - Tbilisi - Baku railroad that may be used for transportation of certain volumes of hydrocarbons has already been signed.
CE: What are the conditions Georgia lays down on Kazakhstan's oil transit via Baku-Tbilisi-Ceyhan pipeline?
Aleksander Khetaguri: The issue regarding transit of Kazakhstan's oil or oil of other origin via the Baku-Tbilisi-Ceyhan oil pipeline (BTC) should be settled taking into consideration interests of all partners of BTC.