North-South gas pipeline issue

The issue of the North–South gas pipeline connecting Russia with Armenia via Georgia is still on the agenda. The Armenians and Azeris are both discussing the possibility of Georgia selling the segment of the pipeline. The issue first arose in 2005-2006 when Georgia wanted to sell its segment of pipeline to Gazprom. The deal was almost complete when US intervened, allotting USD 49.5 million to rehabilitate the pipeline. In spring 2010, following debate in Parliament it was decided that the country can sell this pipeline after April 2011. There are currently two companies interested in purchasing the pipeline: Azerbaijan’s SOCAR and the Russian state-owned company GazProm. Russia’s interests are clear; it wants to secure gas supply from Russia to its strategic partner Armenia. Azeri interests are also clear; by possessing this pipeline it can manipulate its relations with Armenia. The economist Professor Lado Papava thinks both options would prove bad for Georgia. If the pipeline is purchased by Gazprom that will mean that Russian capital in Georgia is yet again increasing, while if it is purchased by SOCAR Georgia will be involved in the conflict between Armenia and Azerbaijan. In addition there is yet another downside as if Georgia sells the pipeline it will lose the 10% of transited gas which Georgia receives for the service, which would result in the buyer reaping the benefits and Georgia having to pay for gas.