Natural Gas Consumption up by 19%, Georgia Looking for Supplies Further South

The Iran-Armenia gas pipeline was inaugurated in 2007 with a capacity of 2.3 billion cubic meters per year. The latest agreement provides that within 20 years, Iran will supply Armenia with 36 billion cubic meters with a possible increase of the contract period by five years and the total volume of deliveries to 47 billion.

Georgian Energy Minister, Kakha Kaladze, at the beginning of the year stated that Georgia is experiencing a shortage of gas and plans to increase purchases of natural gas. He said the Georgian authorities are considering new energy sources, and have therefore been negotiating with the gas companies of other countries.

Negotiations on additional gas volumes were carried out with both the Russian giant Gazprom and with Azerbaijan.

“Georgia does not exclude the beginning of purchases of natural gas from Iran, if Tehran offers a competitive price,” stated Kaladze.

Iranian Ambassador to Georgia, Abbas Talebi-Far, mid-February confirmed that the technical capability to supply natural gas from Iran “needs some work.”

The Ambassador noted that in May 2015, Tehran held a meeting of the Georgian-Iranian intergovernmental commission, in which Iranian and Georgian companies signed an agreement to develop a project on the feasibility of transporting Iranian gas to Europe through Georgia.

“After sanctions against Iran were lifted, there was a good prospect for bilateral cooperation,” the Ambassador said.

Currently, the main importer of gas to Georgia is Azerbaijan, which in early March agreed to increase the volume of deliveries.

Kaladze declared that given the increase in gas consumption in Georgia, the Ministry of Energy is still actively negotiating with both Azerbaijan and Iran but that the proposal of the Azerbaijani state company SOCAR had proved profitable. The sides have already signed amendments to the 2011 memorandum, according to which gas deliveries to Georgia will increase, and prices will fall.

Georgia has not bought Russian gas since 2007, though Georgia receives 10 percent of the total volume of supplies of Russian gas to Armenia as a transit fee.

The growth of gas consumption in Georgia in the past two years may result in a shortage of natural gas. From 2012 to date the gas demand has increased by almost 38 percent. Compared to 2014, consumption of natural gas increased by 19 percent.

Dimitri Dolaberidze