Russia doubles cost of gas
Georgia will pay more than double what it pays now for Russian natural gas under an agreement signed yesterday, a top executive with Russian gas giant OAO Gazprom said, in a deal that could potentially threaten its fragile economy.
Before Gazprom's announcement, Georgia had said it would buy gas from Azerbaijan instead of Russia. But Georgian Prime Minister Zurab Nogaideli said last night that Azerbaijan would not be able to supply gas in the early part of 2007 and Georgia would have to purchase Russian gas instead.
Nogaideli said unspecified "technical reasons" at the massive Shah Deniz field prevented the delivery of Azerbaijani gas, but "as soon as the technical reasons are removed, we'll start getting gas mostly from Azerbaijan".
Shah Deniz's operator, BP PLC, earlier said that output had been halted at the offshore field because of unspecified technical problems. Production began just over a week ago.
Alexander Medvedev, the head of Gazprom's export division, told reporters in Moscow that Gazprom had signed three contracts to supply Georgia with natural gas at $235 per 1,000 cubic meters next year.
Three Georgian companies will receive 1.1 billion cubic meters of gas next year under the deal - an amount that falls short about 700 million cubic meters short the country's expected demand for 2007.
Medvedev expressed satisfaction that at least "the main demand" was met.
"Clouds have dispersed, the sky has cleared and we can look into the future with optimism," he told reporters.
Georgia, which now pays the $110 had long baulked at the higher price, accusing Russia of "political blackmail" and of using its vast energy resources to punish the former Soviet republic's Western-leading policies. Earlier this week Gazprom - Russia's state-controlled natural gas monopoly - had threatened to cut off supplies if the new price was not accepted.
Facing the prospect of either sharply higher prices for Russian gas, or even a full cut off, Georgian officials have sought to seal a deal with Azerbaijan - an energy-rich ex-Soviet republic - for gas supplies.
Nogaideli said earlier that "all legal and technical problems" on Azerbaijani gas supplies had been resolved, and he said he would fly to Baku on Monday to announce price and volume for the Azerbaijani supplies for 2007.
"Naturally, we will continue receiving gas from different sources. In particular, we are continuing to receiving - for the time being - gas from Russia. Georgia will continue its transit role for gas from Russia to Armenian and Azerbaijan and Turkey," he said.
