Gazprom Ups Transit Fees to Georgia
Russian pipeline export monopoly Gazprom has agreed to pay Georgia more for transiting its gas to Armenia, the republic's deputy minister of economy and sustainable development, Natia Turnava, said March 12.
“The term of the previous two-year agreement expired on December 31, 2018. Georgia received full payment for the transit of gas in cash,” she said, without naming the value of the new contract. The deputy head of the opposition had criticised her for allowing Gazprom to part with just 200mn m3 as transit payment in kind, worth $40mn in 2017, compared with just $11mn paid in cash last year.
Georgia normally takes 10% of Gazprom’s exports to Armenia as transit fee. In 2017, gas transit to Armenia was paid for in a mix of cash and raw materials and in 2018 it was paid in cash only. Gazprom exported only 1.93bn m3 to Armenia through Georgia last year, compared with 2.5bn m3/yr contractual volume.
Tournava said that despite the very difficult and lengthy negotiations, the sides also agreed on a lower gas price if the private sector was interested in buying Russian gas.
Georgia received last year 2.5bn m³ from its sole supplier Azerbaijan, including a transit fee of 5% of Azerbaijan's gas exports to Turkey. Georgia's minister for the economy Georgy Kobulia told parliament February 14 that the government planned to diversify gas purchases in order to create more competition in the market.
Gazprom agreed to deliver gas to Georgia in 2017-2018 under flexible conditions at $155/'000 m³, about $30 less than 2016 prices. Last year, Gazprom sold gas to Armenia at $150/'000 m³.
Azerbaijan is preparing to start delivering 16bn m3/yr of Shah Deniz stage 2 gas to Turkey and the EU in early 2020. Azerbaijan also delivers about 6.5bn m3/yr of SD1 gas to Turkey. In total, at least 22.5bn m3/yr of Azeri gas is expected to transit through Georgia after 2020, meaning Georgia would meet almost half its gas demand in transit fees.