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The News in Brief

Friday, July 29
Frontera Bankruptcy Strategy Criticized

Frontera Resources, the American oil-and-gas company that has been exploring and drilling in Kakheti since 1997, is being harshly criticized for trying to evade a $30 million debt payment due August 1.

The company, which has had a long and sometimes contentious relationship with the Georgian government, created a 100%-owned subsidiary company named Frontera Resources Holding LLC in 2011. The company claims that Frontera Resources Holding is responsible for its debt payment. Frontera Resources Holding filed for Chapter 7 bankruptcy on July 21 in the US; a Chapter 7 bankruptcy is used to completely liquidate a company.

Frontera Resources has even filed a suit against its own subsidiary in hopes of evading the August 1 repayment.

Energy sector analysts are not impressed with this maneuver. Writing on, one analyst conceded that while the lenders were gambling with the company, ”… that a management team would not think that they owe monies that are borrowed either shows intellectual deficit, moral deficit or both … this is all the more repugnant as we are sure that they have continued to pay themselves handsomely.”

Frontera Resources has for many years claimed there is huge natural gas potential in their leased Georgia fields. But production has never matched their claims, and earlier this year Georgian government energy officials publicly expressed doubts about Frontera’s predictions. For 2015, Frontera listed revenue of $3.7 million from crude oil and gas sales and reported a net loss of $20.5 million.

Shares of Frontera Resources on the London Stock Exchange have plummeted from 70 pence (about $.91) to below 10 pence (about $.13) in the past week. At least one Frontera Resources director is trying to take advantage of the low stock price. Andrew J. Szescila bought 9.5 million shares this week, all for under 10 pence. He now owns 15 million shares, which is only 0.35 percent of the more than 3 billion shares issued by the company.

A Frontera Resources spokeswoman in Tbilisi said nobody was immediately available to answer questions.

Questions e-mailed to Giorgi Tatishvili, chief of the Georgia State Agency of Oil and Gas concerning any possible effect the bankruptcy might have on Georgia have not yet been answered. On June 17, Frontera submitted an annual resource assessment report to the Agency, but nobody from Frontera attended a meeting that day.

In February, Minister of Energy of Kakha Kaladze said: “You (Frontera) are saying repeatedly that you have found possible resources and tried to represent it as a fact. I want to maintain once more, and without any doubts, that the company has never made any official statement (to the government) about discovery of the resources. Moreover, every barrel or oil or cubic meter of gas that the company is producing are taken from areas that were discovered earlier.” (

Youth in Georgia’s alpine village benefit from renovated sport school

More than 100 children in Georgia’s highland Mulakhi village in mountainous Svaneti region will soon be the beneficiaries of a modern, well-equipped sport school.

The Municipal Development Fund of Georgia of Georgia’s Ministry of Infrastructure and Regional Development has begun reconstruction and rehabilitation works at the Ilia Gavliani Sport School in Mulakhi to transform it from a dilapidated building into a modern facility with high quality gear.

Within the rehabilitation works, new infrastructure will be built to allow the sport school to offer adequate coaching and host sporting events for a range of disciplines including wrestling, alpinism, rock climbing and boxing.

The rehabilitation works also included installing a climbing wall, swimming pool and tennis court.

After being renovated and rehabilitated, the sport school was expected to be used for all types of competitive sporting events, team practice sessions and physical education classes.

Local officials said the sports complex would encourage tourism development and employ members of the local population.

Until now the school functioned in a one storey old farm building that had been built as a sports school in 1980. The existing building was badly damaged, was not equipped with sports equipment and did not fulfil its role as a sports school. (

Russia Hopes for Better Trade with Georgia

Following the announcement that Georgia had supported the extension of EU sanctions against the Crimea and Sevastopol on July 20, a member of the Foreign Affairs Committee in the State Duma of the Russian Federation, Yan Zelinsky, spoke of the necessity to introduce a ban on imports of Georgian wine and mineral water to Russia (read more:Russian deputies demand for new Georgian wine embargo; Abashidze is skeptical).

However, both the Georgian and Russian sides later refuted this statement, highlighting that the countries remain important trade partners.

“The restrictions on products produced in Crimea and Sevastopol were introduced by the EU in 2014. Georgia joined them the same year. Last year they were extended, and now extended again automatically,” said Zurab Abashidze, the Georgian Prime Minister’s Special Representative for Russian Issues. “Thus, it would be illogical for Russia to react this way to a decision which was adopted in 2014.”

After a Russian media outlet reported Zelensky’s statement, the Head of the Foreign Affairs Committee in the State Duma, Aleksey Pushkov, also said that Russia does not consider it necessary to respond to the decision of Georgia and other countries with regards the extension of sanctions.

“Russia does not accept this step as friendly, but at the same time does not consider it necessary at this stage to respond to it,” Pushkov told the Ria Novosti News Agency. “First of all, it is a political step, largely dictated by the Georgian leadership to demonstrate their unity with the West, which was the initiator of these sanctions.”

Pushkov also noted that Russia is committed to the gradual normalization of relations with Georgia and added that “there are [in Georgia] forces that are interested in it as well.”

The Duma member expressed hope that after the parliamentary elections in Georgia this October, it will be possible to create better foundations for the normalization of Russian-Georgian relations across the board. “Recently, during our meetings with Georgian parliamentarians on international platforms, we have the impression that there is certain potential for the resumption of our inter-parliamentary relations, and Russia is ready for this,” stated Pushkov.

Trade relations will naturally take one of the main roles in this issue. According to the latest data from the National Statistics Office of Georgia (Geostat), Georgia’s foreign trade turnover with Russia this January-June grew by approximately 16.5 percent compared to the same period of 2015, amounting to more than USD 390.3 million- 6.8 percent of the total foreign trade turnover of Georgia.

To date, Russia remains the largest importer of Georgian wine, having imported wine to a total cost of USD 22.3 million, which is USD 4 million more than in January-June 2015. Additionally, export of Georgian mineral waters to Russia rose by USD 607,000, amounting to approximately USD 18 million.

Diplomatic relations between Russia and Georgia were terminated following the military conflict in 2008.

At present, the dialogue between Russia and Georgia is supported by the Geneva International Discussions and regular meetings between the Georgian Prime Minister’s Special Representative for Russian Issues, Zurab Abashidze, and the Deputy Foreign Minister of Russia, Grigory Karasin. (