Economic and political dividends to be received by Georgia from TANAP
21 February, 2020
"The Southern Gas Corridor concept will bring significant political dividends and energy security to Georgia" – stated Mr. Giorgi Bakhtadze, General Director of Georgian Oil and Gas Corporation during the interview with report.ge.
According to Mr. Bakhtadze, before putting the Trans-Anatolian Pipeline – TANAP - into operation, Georgia represented a transit country of regional importance only and now it has become a player of international level. From that point forward, gas transited through the territory of Georgia will play a significant role in diversification of international, mostly EU energy markets and increasing security of supply. As a result, according to Mr. Bakhtadze, the prospects of integration of Georgia into progressive international economic and political structures will be significantly increased.
Mr. Giorgi Bakhtadze, General Director of Georgian Oil and Gas Corporation exclusively informed report.ge that "South Caucasus (Baku-Tbilisi-Erzurum) Pipeline located on the territory of Georgia, together with TANAP, will ensure supply of gas from Caspian fields to the markets of Turkey and Europe. After TANAP is put into operation, the volumes of gas transited through the Southern Gas Corridor via the territory of Georgia will be gradually increased".
According to Mr. Bakhtadze, after TANAP was put into operation in 2018, approx. 1,5 bcm more gas (8 bcm in total) was transited through Georgia compared to the volumes stipulated by the contract which was in force earlier. In 2019, approx. 2,7 bcm more gas (9,2 bcm in total) was transited through Georgia. As a result, in 2020 Georgia has an opportunity to purchase additional 75 mcm of gas and in 2021 – approx. 125 mcm of gas at a preferential price.
"In order to make TANAP and the entire Southern Gas Corridor functional, Shah Deniz Consortium spent up to USD 2 billion on construction and services only on the territory of Georgia, to increase the SCP capacity during the last three years, which represented a rather significant international investment support to the country’s economy. In particular, up to 2000 persons were employed at construction on our territory, 62 km long new pipeline, as well as 2 additional compressor stations and a new pressure regulating and measuring station were constructed. Also, it was planned to construct a 2 km bypass pipeline near the pumping station located at the Turkish-Georgian border" - stated Mr. Bakhtadze and added that by putting of the Europe’s gas corridor into operation, Georgia will receive a significant benefit. Mr. Bakhtadze considers that in addition to energy security, the Southern Gas Corridor concept will bring significant political dividends to Georgia.
"As a transit country, Georgia will become subject of direct interest of Europe, which will develop partner relations more and facilitate integration of Georgia into the Euro-Atlantic space. This is a mutual benefit, because Georgia, as a stable and sustainable state, is critically necessary for Europe too. It is important for Europe that the energy flows intended for its market are free from political or other risks to a maximum extent. This was the main circumstance and reason for formation of the South Energy Corridor concept (as the sole import pipeline route, which is an alternative to the Russian gas). Naturally, such large-scale projects may be designed only for strategic partner relations between the participant countries, which is one more significant basic factor of approximation of our country and EU" – explains the General Director of Georgian Oil and Gas Corporation.
According to Mrs. Natia Turnava, Minister of Economy and Sustainable Development, Georgia receives approx. 300 mcm of natural gas free of charge in return for the transit plus equivalent of 10% of gas transited to Armenia in a monetary form (cost of approx. 130 mcm of natural gas). The Minister informed report.ge that Georgia consumed 2.6 bcm of gas in 2019. We met 95% of the demand by import of gas from Azerbaijan. This is the gas that we consumed as a transit country. This includes quota of gas coming from Shah Deniz and gas supplied by SOCAR. We purchased only small volume - 140-160 mcm of gas from Russia, which equals to averagely 5% of our entire market.
We would like to remind you that according to the preliminary forecast, by putting TANAP into operation, the volume of free natural gas received by Georgia will be four times higher by 2023 than today (current volume (300 mcm). Among them, through TANAP (for transiting 23 bcm), Georgia will receive 1.15 bcm of gas, approx. half of the present consumption. This volume will increase up to 1.5 bcm (for transit of 31 bcm of natural gas) by 2026; In 2030 it is planned to increase TANAP capacity up to 60 bcm, which implies free transfer of 3 bcm (1.4 times more than the present consumption of Georgia) of natural gas to Georgia.
According to Mr. Bakhtadze, before putting the Trans-Anatolian Pipeline – TANAP - into operation, Georgia represented a transit country of regional importance only and now it has become a player of international level. From that point forward, gas transited through the territory of Georgia will play a significant role in diversification of international, mostly EU energy markets and increasing security of supply. As a result, according to Mr. Bakhtadze, the prospects of integration of Georgia into progressive international economic and political structures will be significantly increased.
Mr. Giorgi Bakhtadze, General Director of Georgian Oil and Gas Corporation exclusively informed report.ge that "South Caucasus (Baku-Tbilisi-Erzurum) Pipeline located on the territory of Georgia, together with TANAP, will ensure supply of gas from Caspian fields to the markets of Turkey and Europe. After TANAP is put into operation, the volumes of gas transited through the Southern Gas Corridor via the territory of Georgia will be gradually increased".
According to Mr. Bakhtadze, after TANAP was put into operation in 2018, approx. 1,5 bcm more gas (8 bcm in total) was transited through Georgia compared to the volumes stipulated by the contract which was in force earlier. In 2019, approx. 2,7 bcm more gas (9,2 bcm in total) was transited through Georgia. As a result, in 2020 Georgia has an opportunity to purchase additional 75 mcm of gas and in 2021 – approx. 125 mcm of gas at a preferential price.
"In order to make TANAP and the entire Southern Gas Corridor functional, Shah Deniz Consortium spent up to USD 2 billion on construction and services only on the territory of Georgia, to increase the SCP capacity during the last three years, which represented a rather significant international investment support to the country’s economy. In particular, up to 2000 persons were employed at construction on our territory, 62 km long new pipeline, as well as 2 additional compressor stations and a new pressure regulating and measuring station were constructed. Also, it was planned to construct a 2 km bypass pipeline near the pumping station located at the Turkish-Georgian border" - stated Mr. Bakhtadze and added that by putting of the Europe’s gas corridor into operation, Georgia will receive a significant benefit. Mr. Bakhtadze considers that in addition to energy security, the Southern Gas Corridor concept will bring significant political dividends to Georgia.
"As a transit country, Georgia will become subject of direct interest of Europe, which will develop partner relations more and facilitate integration of Georgia into the Euro-Atlantic space. This is a mutual benefit, because Georgia, as a stable and sustainable state, is critically necessary for Europe too. It is important for Europe that the energy flows intended for its market are free from political or other risks to a maximum extent. This was the main circumstance and reason for formation of the South Energy Corridor concept (as the sole import pipeline route, which is an alternative to the Russian gas). Naturally, such large-scale projects may be designed only for strategic partner relations between the participant countries, which is one more significant basic factor of approximation of our country and EU" – explains the General Director of Georgian Oil and Gas Corporation.
According to Mrs. Natia Turnava, Minister of Economy and Sustainable Development, Georgia receives approx. 300 mcm of natural gas free of charge in return for the transit plus equivalent of 10% of gas transited to Armenia in a monetary form (cost of approx. 130 mcm of natural gas). The Minister informed report.ge that Georgia consumed 2.6 bcm of gas in 2019. We met 95% of the demand by import of gas from Azerbaijan. This is the gas that we consumed as a transit country. This includes quota of gas coming from Shah Deniz and gas supplied by SOCAR. We purchased only small volume - 140-160 mcm of gas from Russia, which equals to averagely 5% of our entire market.
We would like to remind you that according to the preliminary forecast, by putting TANAP into operation, the volume of free natural gas received by Georgia will be four times higher by 2023 than today (current volume (300 mcm). Among them, through TANAP (for transiting 23 bcm), Georgia will receive 1.15 bcm of gas, approx. half of the present consumption. This volume will increase up to 1.5 bcm (for transit of 31 bcm of natural gas) by 2026; In 2030 it is planned to increase TANAP capacity up to 60 bcm, which implies free transfer of 3 bcm (1.4 times more than the present consumption of Georgia) of natural gas to Georgia.