Eric Watkins
Senior Correspondent
LOS ANGELES, Jan. 11 -- Azerbaijan's Azarigaz began exporting natural gas Jan. 11 along the Haciqabul-Qazax-Tbilisi trunk line to Georgia, which is seeking to reduce its dependence on increasingly expensive Russian supplies.
The State Oil Company of the Azerbaijani Republic (SOCAR) will initially supply 3 million cu m/day of gas from Jan. 11-21 at a cost of $120/1,000 cu m. By the end of January, gas from Azerbaijan's Sah Daniz field will be supplied to Georgia via the Baku-Tbilisi-Erzurum pipeline.
Georgia is expected to require 1.8 billion cu m of gas in 2007 and had an agreement with Russia's OAO Gazprom to supply 1.46 billion cu m this year. But on Nov. 2, 2006, Gazprom announced that prices for the Georgian market could more than double in 2007 to $230/1,000 cu m from $110/1,000 cu m. As Georgia balked at paying the new price, Gazprom threatened to cut off supplies.
Meanwhile, to bolster its energy security, Georgia is reportedly considering plans to repair its main gas lines and to build a gas storage facility in the southern Ninotsminda district initially capable of storing as much as 500 million cu m of gas.
US-financed Millennium Challenge Corp. will undertake a feasibility study of the project, which is expected to attract foreign investors. The potential site was recently viewed by Lasha Shanidze, president of the local Millennium Challenge Georgia Fund (MCGF).
Last November, MCGF formally launched its Energy Infrastructure Rehabilitation Project after signing contracts with Georgian and Azerbaijani firms for repairs on the six most hazardous sections of the country's North-South gas pipeline.
On Nov. 3, 2006, MCGF entered into two, 120-day contracts for the repair work with Georgia's Geoengineering and Azerbaijan's Khazardenizneftegaztikint.
The Azeri firm will work on the northern section of the gas main and accomplish urgent repair works on four sites, while the Georgian company will work on the remaining two sites in the south section of the pipeline.
John F. Tefft, US Ambassador to Georgia, said the repairs would increase gas supplies to Georgia and neighboring Armenia by reducing the threat of breaks, leaks, and emissions. He said the project is one of several supported by the US government with a view to enhancing Georgian energy security.
Contact Eric Watkins at [email protected].
