Wednesday, August 15, 2007, #155 (1422)

Tbilisi natural gas distributor announces overtures towards Iranian producers

By Nino Mumladze

Iran may supply natural gas to the capital next year, supplementing current Russian and Azerbaijani providers, KazTransGaz-Tbilisi announced at an August 14 press conference.

"We hope to fill up the volume of gas supplies from Iran or other suppliers," said Giorgi Koiava, director general of KazTransGaz-Tbilisi, a Kazakhstani-owned gas distributor in Tbilisi.

The push to diversify energy resources is motivated by high prices on Russian gas, company executives explained.

Early in 2007, Russia more than doubled its prices on natural gas for Georgia, raising the cost of 1000 cubic meters from USD 110 to USD 235.

KazTransGaz-Tbilisi, company representatives emphasized, is not moving away from Russia as a supplier.

"We continue to hold talks with the Russian side and will do so in the future…having several providers means a stable system, first of all. That's why we aren't crossing any of them out-Iran, Azerbaijan, or Russia," declared Daniar Berlibaev, chief executive of Intergas Central Asia, a pipeline operator which, like KazTransGaz-Tbilisi, is a subsidiary of Kazakhstan's national KazMunayGaz energy company.

No price or purchase figures in the talks with Iran were released, but company officials promised that there would be no price increases for consumers.

Tbilisi needs 4 million cubic meters of gas each day in winter; the capital consumes much less in warmer weather when consumers turn off their heaters.

Economic expert Gia Khukhashvili is critical of bringing Iranian gas to Georgia. There are political angles to the plan, he tells the Messenger.

"The major risk of becoming energy-dependent on the US-opposed and Russia-friendly nuclear power Iran is undermining Georgia's Euro-Atlantic aspirations," Khukhashvili said, warning that any long-term energy ties with Iran could burn bridges between Georgia and its key strategic partners.

Tbilisi officials have asked Iran for gas before, during last winter's energy crisis. The gas supply from Russian was cut off after explosions crippled the pipeline feeding Tbilisi. The US turned a blind eye to temporary gas imports from Iran, Khukhashvili says, given the exigent circumstances.

A number of US officials, however, have more than once voiced their country's opposition to a long-term Georgian energy pact with Iran.

In an interview with the Georgian weekly Kviris Palitra last November, US Ambassador to Georgia John Tefft stated that while the White House understood the need for a short-term deal between Georgia and Iran, any strategic partnership between the two countries would be unacceptable for the US.

"Georgia is playing with fire," Khukahsvili says, chalking the move up to Russian maneuverings.

"I was stunned by KazTransGaz-Tbilisi's impudent statement on diversifying energy sources. It's ridiculous to offer Iranian gas as an alternative to Russian supplies. If the main problem lies in the price, then it would be more logical that the Kazakh company propose cheap Kazakh cheap gas," he says.

Khukahsvili says that Russia's Gazprom is already supplying Georgia with Kazakhstani gas, which he claims is purchased for around USD 130 per thousand cubic meters and resold to Georgia for USD 235. A direct deal with KazMunayGaz, he argues, would be far better than a politically risky agreement with Iran. Georgian authorities, the analyst recommends, should nip any talks with Iran in the bud.

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