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Georgia signs updated deal with Azerbaijani gas provider SOCAR

By Tea Mariamidze
Monday, March 7
Georgia will receive an additional 500 million cubic meters of gas from the Azerbaijani state gas company, SOCAR. Georgian Energy Minister Kakha Kaladze and Rovnag Abdullayev, SOCAR's President, signed the updated agreement on March 4 in Tbilisi, Georgia.

The current agreement is an updated version of a memorandum signed in 2011. An amended version of a separate agreement from 2012 was also signed on the same day between the two sides.

Under the new contact conditions, SOCAR will provide Georgia with additional 500 million cubic meters of gas. In addition, it will reduce the price of commercial gas supplied to Georgia to 35-40 US dollars per 1000 cubic meters. The price of non-commercial gas will also be lowered.

SOCAR President Rovnag Abdullayev stated that "the agreement will ensure a stable gas supply to Georgia" and added that "SOCAR will continue to support the Government of Georgia and the company will invest in Georgia".

According to Energy Minister Kaladze, Georgia will have no problem in terms of its natural gas supply in the future.

“Compared to 2012, the consumption of natural gas in Georgia increased by 40%, which conditioned the need for purchasing additional volume of gas”, said Kaladze, and added that Georgia will be provided with the additional volumes via the Shah Deniz pipeline.

The Minister underlined that there is no need to import additional gas from other sources like Iran or Russia's Gazprom, as the technical problems with Socar have been solved.

Kaladze stated that the Georgian side offered Gazprom to remain under its old contract, which means that Georgia will receive 10% of its gas from Gazprom, as a transit fee for gas transit from Russia to Armenia.

"We have recently sent our last offer to them. We offered them to stay under the old contract. Namely, we want to receive 10% of the natural gas," said Kaladze.

It should be noted that the Georgian Energy Minister held talks with Gazprom about getting additional gas volume. Instead, Gazprom offered to monetize the transit fee and pay in cash, which would be unprofitable for Georgia as it has been receiving 200 million cubic meters of natural gas per year in return for the gas' transit.

Georgia receives gas from two sources in Azerbaijan. About 712 million cubic meters of gas came in 2015 as part of the deal in frames of the BP-operated South Caucasus Pipeline from Shah Deniz field and 1.48 billion cubic meters of Azerbaijani gas was imported in 2015 as part of a separate contract with SOCAR.