Oil in Georgia and in the world
Sofo Gogoladze
On the 17-18th of March 2005, the organizer of exhibitions and conferences in CIS countries ITE Group PLC and its exclusive partner in CIS countries ITECA Kavkasia held an international exhibition and conference on Georgian oil, gas, energy and infrastructure – GIOGIE 2005.
Among GIOGIE sponsors were BP, Statoil, Batumi oil terminal, Amec Spie-Petrofac, Canargo, Turkish Petroleum International Co. (TPIC), Channel Energy, Ernst&Young.
The goal of the forum was to hold a dialogue between government members and major businessmen in oil and gas industry. Topics of the dialogue comprised construction of Baku-Tbilisi-Jeikhan oil pipeline that is nearing its end as well as construction of gas pipeline, other transportation routes, energy sources, investment in appropriate infrastructures, existing oil fields and oil production within the country. President of US-Canadian company Canargo David Robson said at the conference that the company plans to increase oil output in Georgia up to 2500 tons by the end of the year. The company has already invested 80 million dollars in oil production and it plans to invest 350 million dollars more in exploration of oil and gas reserves in the vicinity of Tbilisi.
In the meantime, amendments have been made to the law. Oil and gas regulatory agency might become abolished. According to the government’s amendment, the function of the agency might be delegated to the Ministry of finance. The regulatory agency used to issue licenses, and only oil and gas output, production and transportation were subject to licensing. According to the legislation on issue of licenses for oil products and tobacco sectors, the Ministry of finance has the authority to issue licenses and oblige importers, wholesale suppliers, transporters and sellers to take different licenses. In interests of state, it should be said that smuggling remains high though today it has been decreased as compared to previous years.
The problem of high oil prices is important to the whole world. Since 2005 crude oil price has been growing steadily reaching its peak in the second half of March with 57,5 dollars per barrel in New York exchange. Urals Russian oil has for the first time exceeded the limit of 50 dollars per barrel. Even the OPEC’s decision to increase oil output quotas to 500000 barrels per day has not helped to satisfy the market.
If price growth trend persists, the oil cartel might soon start talks on further growth of quotas, energy minister of Kuwait and OPEC president Sheikh Ahmad Al-Fahad Al-Sabah said. To experts’ mind, if those involved in oil production industry manage to assure consumers that oil output will not reduce and their growing demand will be satisfied, oil prices might fall already in the second quarter down to 35-40 dollars. The possibility of oil prices growing looks more probable.