Friday, July 9, 2010

Georgia Approves Sale of Pipeline Delivering Russian Gas To Armenia

TBILISI (Oil & Gas Eurasia)–The Georgian parliament has approved the sale of a trunk gas pipeline which pumps Russian gas across Georgia to Armenia. eighty-eight members of parliament favored the law, while five voted against the measure.

Despite the law being passed by parliament, the Georgian opposition does not share the majority’s enthusiasm for the sale which they say will be “an energy and economic threat to Georgia”, RBK reports.

Parliament members of the opposition suggest that instead Georgia should retain a 51 per cent stake in the pipeline and remain the pipeline operator. The majority however, deemed the “Russian threat” exaggerated and passed the law. Another argument used in favor of the sale was the fact Tbilisi believes “private companies are more effective in managing such sites than the government”.

The trunk pipeline was built in the 1970s. it has not been upgraded since 1980.

Georgia’s intention to sell a trunk gas pipeline (north-south) delivering Russian natural gas to Armenia across Georgia has raised concerns in Armenia that the gas pipeline might be sold to an Azeri enterprise, which already owns Georgia’s 30 natural gas distributor companies.

If Azeri-owned (though Georgia expects to retain 51 percent), it is possible that transfer to Armenia would be shut off, losing a source that supplies about 70 percent of Armenia’s natural gas.

Earlier this week the Georgian parliament, on first reading, approved the bill on removing the gas pipeline from the list of strategic facilities, and later its privatization will be allowed according to the law.

The issue of selling the pipeline has been voiced since 2005, when the Russian Gazprom Company wanted to buy the pipeline to recover and repair it.
However, later, the United States sponsored its repair works, and that issue was closed.

In 2008, after the SOCAR Energy Georgia subsidiary company of an Azeri oil company bought about 30 natural gas distributor companies in Georgia, the issue of the natural gas entering Armenia was voiced again.

Georgian analysts are sure that it will not be sold to the Russian Gazprom by any means, so the second most probable purchaser is the Azeri SOCAR Energy Georgia.

Stepan Safaryan, head of the oppositional Heritage parliamentary faction, is sure that it may result in serious problems for Armenia, even up to an energy crisis.
“The Armenian authorities must do everything possible to prevent that deal, otherwise it may have serious consequences,” Safaryan told ArmeniaNow.
Hrant Bagratyan, former Prime Minister of Armenia, says that the first step that Armenia must take is to buy it.

“If Azerbaijan buys it [gas pipeline], the consequences are very clear. But first of all, the issue must be discussed why Armenia is not doing anything to buy it. The Republican Party [of Armenia] should have already discussed the issue for at last ten times, and must have looked for solutions,” Bagratyan told ArmeniaNow.

The Republican Party, however, has not discussed the issue.

Deputy Speaker of the National Assembly of Armenia Samvel Nikoyan told ArmeniaNow that as far as the major part of the gas pipeline (51 percent) stocks will be under Georgia’s control, “possibly no problems will occur no matter who buys it.”

“There are some concerns, but the ArmRosGazprom [joint Russian-Armenian national gas distribution company] recently made a statement that there was nothing to worry about,” Nikoyan says. He does not know yet whether Armenia will participate in the auction.

“It would not be bad if any Armenian enterprise bought it,” he says.

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