January 26, 2018  |  Updated April 20, 2018

Speculation by Simon Kiladze and an Obiektivi Anchor about the Energy Security of Georgia

By Sopo Gelava

A former Advisory to the Administration of the President of Georgia and convicted of espionage for Russia, Simon Kiladze spoke about the energy supply of Georgian on air at TV Obiektivi on January 15, 2018. During the TV program, he underlined that there is no substantial difference between Georgia’s energy dependence on Russia and Azerbaijan and regarded them in a single light. The anchor of the program also added that Georgia has to pay more for the energy coming from Azerbaijan, which is the results of lobbying by certain powers.

Import of gas from Russia made Georgia dependent on the Russian energy resources – something, that Russia used as a political tool. Explosion on the main and reserve gas pipelines on the territory of North Ossetia in January 2006 left Georgia without gas and electricity for a while. Gazprom doubled the gas tariff for Georgia after this incident. A shift to the gas imported from Azerbaijan strengthened the energy security of Georgia. In addition, importing gas from Azerbaijan is cheaper for Georgia than importing it from Russia.

Dependence of Georgia on the Russian Energy Resources

Two parallel explosions took place in the North Ossetia in January 2006 on the main gas pipeline “North Caucasus – South Caucasus” and the reserve pipeline “Mozdok – Tbilisi”, due to which Georgia was left without gas supply for two weeks in winter, causing an energy crisis in the country. Several hours after the pipeline explosion, a high-voltage transmission line exploded in Cherkessia, leaving Georgia without electricity for several days. That time, the Government of Georgia accused Russia of a sabotage against Georgia.

Several months following these incidents, Russia state company Gazprom increased the gas tariff for Georgia and set it on $235 instead of the existing $110 for one thousand cubic meters, which was the highest tariff of the Russian gas among all the members of CIS. For example, a Russia-friendly Belarus was paying $46 for one thousand cubic meters, while Ukraine was paying $135. Following these developments, Georgia faced the necessity of strengthening its energy security and diversifying energy sources.

Georgia – Azerbaijan Cooperation in the Energy Sphere

Nino Ratishvili’s statement that it is more expensive for Georgia to import gas from Azerbaijan, is not true. The price of the “social gas” imported from Azerbaijan is $120 for one thousand cubic meters, while the price of the “social gas” for the thermal power stations is $143, which is significantly lower than the tariff set in 2007 ($235). This amount is also lower than the one envisaged by the 2016 agreement with Gazprom, according to which, if any shortfall that arises, Russia would import gas to Armenia through Georgia, and Russia would provide gas to Georgia for the price of $185 per one thousand cubic meters. In addition, in parallel with negotiations between Kakha Kaladze and Gazprom, SOCAR stated that it would provide additional 500 million cubic meters of gas for a tariff decreased by $35-$40. It is also noteworthy that Gazprom sells gas to Armenia, a strategic partner of Russia, for $165.

The initial agreement between Georgia and an Azerbaijani oil company SOCAR on supplying Azerbaijani gas was signed in 2008.

Since then, Azerbaijan has been the biggest importer of gas in Georgia. Georgia receives gas from Azerbaijan through the South Caucasus Pipeline (SCP), from Shah-Deniz gas field, which represents a resource alternate to the Russian one. In future, SCP will be connected to the Trans-Anatolian Natural Gas Pipeline (TANAP), which, in turn, will be connected to the Trans Adriatic Pipeline (TAP).

Energy Dependence, as Russia’s Political Tool

Using energy for strengthening its influence is a part of Kremlin’s strategy. According to a report by the Foreign Committee of the US Senate, this strategy includes not only using energy supply as a tool, but also controlling energy infrastructure in the countries of Europe.

A 2014 study commissioned by members of the European parliament found that Gazprom, Russia’s state-owned natural gas company, controls large amounts of shares—sometimes even majority stakes—in energy trading, distribution, pipeline, and storage facilities in several Central and Eastern European countries.

According to an Atlantic Council report, ‘‘many countries that were heavily depending on Gazprom’s gas were thus given a de facto choice: compromise with Russia on sensitive political and economic issues…”

Russia counters the attempts of diversifying energy supply paths from the European countries by alternative projects. According to the US Senate Foreign Committee report, the Turkish Stream as well Nord Stream (NS1), offered by Russia, were economically non-beneficial and ultimately aimed to decrease the role of Ukraine, as a transit country for the Russian gas flowing to Europe. Senate labels NS1 as a part of “divide and rule” policy of Russia.

This article was originally published by Myth Detector.

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