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What are the economic indexes of the fuel and energy sector of Georgia today? What is fuel and energy complex’s share in the country’s gross output?
4,730.2 million kilowatt-hours of electrical energy, 64,900 tones of oil (including gas condensate), 4,200 tones of coal have been produced and 24,500 tones of oil have been refined in Georgia for the period of January, 2000 to July, 2000.
A share of electrical energy in the country’s output for the mentioned period of 2000 totaled 34.78% that is 7.5% higher than similar index for the corresponding period of 1999.
Crude oil annual production rate in the petroleum industry reduced from 3.3m tones to 42,000 tones, and the gas production stopped at all in the period from 1983 to 1995.
In present situation the only way to safe the sector is to attract foreign investments and create favorable environment for them. As a result of intensive work ongoing in this direction, the largest companies worldwide are engaged in joint business in oil and gas production sector of Georgia.
Does present condition of the oil and gas processing system meet Georgia’s demands?
An establishment of a common legal basis for development of oil and gas recourses contributed to acceleration of oil industry progress and conducting common governmental policy in the sphere. The legal basis was introduced after adopting by the Parliament in 1999 the law "On Oil and Gas", which had been worked out by the Ministry of Fuel and Power Engineering. According to the law a state supervision and control body for the oil and gas transactions was set up – Oil and Gas Recourses Regulation Agency.
As a result of undertaken reforms, the state company of Gruzneft was reorganized into a joint-stock company "National Oil Company of Georgia – Gruzneft", that enable it to carry out large-scale research and survey operations jointly with foreign companies. The efforts made by the joint ventures led to suspending oil production rates reduction and increase the production rate to 100,000 tones by 1999, as a result of what Georgia has produced 560,500 tones of crude oil and 30.4m cubic meters of gas from 1995 till now. At the same time the Sartichala refinery’s output from mid-1998 to present days amounts to 122,700 tones of oil.
What are the companies Georgia cooperates with in this direction?
As a result of operation of the Georgian-British oil company "Ninotsminda" it became possible to resume gas production at the Ninitsminda field in 1999 in Georgia. It is notable that in order to increase hydrocarbons production rates the company started about preparatory work on drilling new horizontal well. In all for 2000-2005 the company is intended to produced 541,000 tones of oil and 1,405m cubic meters of gas for the purpose of what it is stipulated to drill additionally five new well.
This May the Georgian-American oil company "Frontera Eastern Georgia" put into operation a new well "Niko-1" (target depth of 3,4000 meters) at the Tariban field. The well has a daily production rate totaling 100-120 tones. By the end of this year it is scheduled to drill one more new well. In accordance with forecasts the company has it is intended to drill more than 50 well and produce 6.5m tones of oil for 2000-2005.
A majority of probable recourses of oil in Georgia are located at the Black Sea continental shelf. Thus, it is an encouraging factor that "Anadarko", a well-known company in the world oil business, made a decision to carry out prospecting work for oil and gas jointly with the National Oil Company of "Gruzneft" and JKA Ltd. Within the framework of this decision it is also planned to drill long holes at the shelf. The corresponding contract was signed on June 26, 2000.
Not only the future of the energy sector significantly depends on successful results of ongoing process, but also the fact that the oil and natural gas industry will be able to establish a powerful economy of the country. Thus, the Ministry of Fuel and Power Engineering hopes on the governmental support in the question of developing the oil and gas industry.
What are issues of the day for the development of this sector of the Georgian economy?
Judging by the interests of the country’s economy, this sector needs a serious support that would serve prerequisite to renascence and further development of local oil refining industry.
The operation of the plant, which was constructed in 1998 in Sartichala by the Georgian-American oil refining company, entails some difficulties. The value of excise and traffic taxes set for the oil products produced was a serious problem and it resulted in the company’s output becoming noncompetitive. As a result of considering the issue at the governmental level it became possible to keep normal working conditions for the company. The term of validity for the loan regime was defined till August 20, 2002. Due to that and other problems the company paid back only USD450,000 to the investors so far, that is 13% less than sum required. A treat now become possible that the company would not be able to pay back investments in agreed terms because of low productivity of the plant.
Are there possibilities for further expansion of the economic integration of the fuel and energy sectors of our countries? Do you work in this direction?
To provide further integration with the Azeri gas industry and receiving Azeri gas, the Georgian International Gas Corporation has carried out rehabilitation on the main gas lines. According to available information, similar work is carried out in Azerbaijan as well. On completion of the work Georgia will be ready to receive Azeri gas.
For future economic development of Georgia and Azerbaijan a great importance is attached to deepening cooperation in the oil and gas sectors and implementation of joint regional projects.