Despite Frontera's Confident Estimates, the Georgian Government Is Sceptical
Though American independent energy company Frontera Resources has raised its gas reserves estimates for its licence in the Kakheti region, the Georgian government says that much more investment and proof is needed for it to be convinced.
Last October, Frontera announced that the South Kakheti gas complex could have as much as 3.8tn m3 of gas in place. However, following a recent update in January, based on extensive integrated geologic and geophysical studies, the company has revised its estimates upwards.
"This ongoing technical analysis has provided a more detailed understanding of the extensive integrated gas resource potential that continues to evolve and now appears larger than previously identified in October, with as much as an additional 52.5tn m3 (1.5tn m3) of gas in place added to the company’s previous estimate," a statement from Frontera said. "The overall estimate now stands at 187tn m3 (5.31tn m3)."
On January 5, Georgia's energy minister, Kakha Kaladze, questioned the estimates, saying that the volume of gas Frontera estimates to be in place at the South Kakheti gas complex are even higher than those of gas-rich Turkmenistan. Additionally, he said, the cost to prove those resource estimates would be high.
"There might be some reserves underground, but billions of investments are needed to prove it," he told journalists following a meeting in Tbilisi. "Then it will be decided if the gas extraction will be profitable."
The minister's statement echoes those made by his deputy, Mariam Valishvili, on February 3, who said that Frontera Resources has been making similar statements for three years, revising the estimates each time. Initially, the company assessed the potential reserves in place at 43bn m3; later it revised it to 1 tn m3 before revising it again in October to in 3.8tn m3.
"Frontera commissioned a report evaluating the potential reserves that may exist in Georgia, but they are not confirmed as recoverable," Valishvili stressed. "Such potential resources exist in the whole world. We are expecting from Frontera an investment plan to prove these resources. It includes expanded survey program in order to determine to what extent it is commercially viable to start production of these resources."
He also pointed to Frontera's current gas output, which is said is equal to only two days' gas consumption in Georgia winter.
US-based consulting firm of Netherland, Sewell & Associates provided the initial independent assessment of the company’s estimates, Frontera said. Now, Frontera is "in the process of completing the second independent assessment of its gas resource estimates associated with the South Kakheti Gas Complex," it said.