FROM THE REDACTION
Minister of Energy of Georgia signed memorandum of mutual understanding about co-participation in White Stream pipeline project, on third of April.
Soon Rumania and Ukraine will sign the mentioned memorandum also. Until then, at the end of March, in the capital of Russia Moscow, memorandum between Gasprom and Azerbaijan representatives has been signed about Gasprom purchasing Azerbaijani gas. At the same time, Minister of Foreign Affairs of Italy declared that gas pipeline project Turkey-Greece-Italy (TGI) is more beneficial than that of Nabucco project, as its accomplishment is possible in shorter terms.
Does this mean that Nabucco project is not of first-priority any more either for Europe or for other participant countries, as it seemed to be in the past? Moreover, if we take into account that there was no lack of sceptically disposed politicians in EU up to now.
Eighth international conference of Oil, Gas, Energy and Infrastructure has been held in Tbilisi on 2-3 of April. Together with Georgian government officials, various oil and gas company representatives attended the conference, both from Georgia and from foreign countries, including Turkey, Azerbaijan and Kazakhstan.
One of the main themes of the discussion at the conference was the importance of White Stream project. Within the framework of the conference, Georgian Energy Minister Mr. Aleksanre Khetaguri and Roberto Pirani, the head of White Stream Pipeline Company Limited have signed memorandum of mutual understanding. The mentioned company is a builder of White Stream main. The memorandum signed between Georgia and White Stream Pipeline Company Limited is the first in White Stream project. The next memorandum will be formalized with Rumania and Ukraine governments that are participants of the project also. White Stream project is also known as Georgia-Ukraine-EU gas main. Experts forecast that project should be approximately accomplished in 12-18 months.
By means of White Stream main, the gas will be delivered from Caspian Sea to Georgia, Rumania and Ukraine across Black sea and to Central Europe afterwards. Initially gas main will transmit 8 billion cubic metres of gas produced at Shahdeniz deposit. Lately it is possible to connect White Stream with Trans-Caspian gas pipeline. In this case, additional pipe will be laid underwater and thus passability of the pipeline will be increased up to 24-32 billion cubic meters a year.
As Georgian officials note White Stream is only additional resource for providing Europe with gas and it is unacceptable to consider it as Nabucco alternative. The future shows whether these words come true or not. Azerbaijani party often has to answer questions about Nabucco priority also. And reason of this is abovementioned memorandum signed with Russian company.
Gasprom and Azerbaijan agreed to negotiate about providing Azerbaijani gas to Gasprom from 2010. Gasprom’s head Aleksei Miler and Rovnag Abdulaev the president of Azerbaijani state oil company led negotiations held in Moscow. Parties signed memorandum of mutual understanding. Supposedly, gas will be provided to Russian party in 2010 at Azerbaijani-Russia border. During further negotiations, economic practicability and variants will be discussed about exchange operations of natural gas. The mentioned negotiations were planned and discussed in 2008, by Azerbaijani president Ilham Aliev and Miler. In February 2009, Aliev said that Gasprom’s offer was “attractive”. In the nearest future, technical inspection and modernization of 200 km length gas pipeline Baku-Novo-File.
After signed memorandum with Gasprom, some of Cetral and Eastern European experts expressed their doubts that Ilham Aliev is not interested in European Nabucco project anymore and it is not excluded that he will give preference to gas main connected with Russia. Many experts reckon that agreement between Gasprom and Azerbaijani increases the chances that Nabucco will be left without gas.
However, after returning from Moscow Rovnag Abdulaev declared that Azerbaijani is still interested in European project and it negotiates with the participant parties of the project. President Aliev supported Nabucco project at Budapest conference. However, unlike Gasprom EU hasn’t signed any written agreement with Azerbaijani and it doesn’t hold any grounded documentary warranties that countries of gas producing region will not left Europe without gas. In such terms, words remain just words and nothing more. Many people in Europe are skeptic toward Nabucco project. Gas pipeline project Turkey-Greece-Italy (TGI) is much “better” than Nabucco, as it can be accomplished in shorter terms”, – declared Italian Foreign Affairs Miniser Franco Frantini. Italian minister hopes that soon contracts will be signed with every project participant that fastens terms of accomplishment even more. Allow me to remind you that TGI was recognized as priority Þ page 9 project by EU in 2006. TGI will provide gas to Europe from Caspian region, partially from Azerbaijan, that will be delivered to Italy through Georgia, Turkey and Greece. Inauguration of gas pipeline was held in 2007, while the project will be finished in 2012. Its initial passability will be 11.5 billion cubic meters a year.
Will White Stream, Gasprom-Azerbaijani memorandum and TGI become gravediggers of Nabucco? I guess the future shows this.
There is no stable domestic situation on gas market in Georgia. Stirs concerning KazTransGas Tbilisi still go on.
Temporary assigned management in KasTransgas Tbilisi started to recover 80 million GEL debt of the company to Oil and Gas Corporation. As Kaztransgas Tbilisi declare that temporary management has no specific term or schedules of debt recovering. If Kazakh company pays the debt in a timely manner it will return right of company’s management. Kazakh party makes a protest against assignment of special manager and plans to file a case at international arbitration. KazTransGas accuses Energy regulating Committee of Georgia in breaching high-level agreements and menaces with filing a case at the court. The company’s official site states that on 16 March Kutaisi regional court certified decision of energy regulating committee of Georgia about assigning representative at KazTransGas Tbilisi. The statement claims that the decision was made without participation of KazTransGas Tbilisi representatives. KazTransGas notes that the company has made $100 million investment. However, due to complicated economic situation in the region, consumers do not pay gas charges on time. Despite that gas is provided without interruptions and thus KazTransGas Tbilisi has not violated license terms and conditions.
“At current stage, joint-stock company KazTransGas Tbilisi is taking measures to control fairness of decisions made by Energy Regulating Committee of Georgia and assess how far these decisions correspond agreements made earlier, including the ones signed between Georgian and Kazakh governments”, – is written in the statement published by the company.
The committee declares that these measures were necessary because the Kazakh Company’s debt has made up 80 million GEL, including debt in amount of 68 million GEL of Georgian Oil and Gas Corporation.
At the same time, some information is spread that Kazmunaigas is ready to sell Tbilisi gas Distribution Company, if the investments made in company would be “compensated”.
“Last autumn we declared that we are willing to sell Tbilgas”, – reports Kazakh state information agency based on the words of Kazmunaigas CEO – Kaigeldi Kabildini. He made this statement at the conference held in Astana on 25 March.
Everything that can be purchased can be sold out either – the price is important only. We are willing to sell the company, on condition that our investments, debt financing and financial aid compensation in KazTransGas Tbilisi”.
Kazmuingas is the only stakeholder of Kaztransgas. The company’s investments in Tbilisi gas distribution network made up $100 million.
KazTransGas head office explains that the statement made by the company doesn’t mean that KazTransgas Tbilisi is already offered for sale. “Company declared the condition at which GasTransgas Tbilisi might be sold out. There is no specific buyer and consequently there are no negotiations about this matter. It is not easy to find serious company that would buy KazTransGas Tbilisi – declares head office.
Socar Georgia is not concealing that it has some interests of buying TbilGas. Azerbaijani State Oil Company is not planning to do this at the current stage. However, such development of events is not excluded in the future, as the company has own interests on Georgian gas market. Head of SOCAR Energy Georgia Mahir Mamedov made a statement about this. According to his words, the company that is main provider of gas in Georgia plans to cooperate with Georgian government in future also. As regards SOCAR itself, the company has appeared on Georgian market in 2006, when SOCAR Georgia was founded. Since then SOCAR made more than $400 million investment in Georgia. According to SOCAR information, the company has transferred to Georgian budget100 million GEL in 2007 and 172 million Gel in 2008. SOCAR’s gas price is $167 per 1000 cubic meters for every participant of Georgia’s gas distribution market, including TbilGas, while the price of gas for energy generation objects is $143 per 1000 c/m. However, purchase of KazTransGas Tbilisi by SOCAR will bring monopoly on Georgian domestic energy market and the monopoly will be in hands of foreign company. In order to avoid energy dependence on foreign companies, whether they are Azerbaijani, Russian or Kazakh, it is essential to accomplish international gas pipeline projects such as Nabucco, TGI, and White Stream, which were discussed above by us. Georgia will receive own gas from these projects as transitive country.