Gazprom in Georgia: Mutually Beneficial or Reigniting Old Conflicts?

Gazprom building in Moscow.

Gazprom makes international headlines again as the Russian gas behemoth seeks to increase its sales and potentially its influence in Georgia. Faced with winter gas shortages, the Georgian state has been juggling the idea of turning to Russia to meet its growing demand for natural gas.

Minister of Energy Kakha Kaladze has been meeting with Gazprom officials since at least September 2015. In a statement toEurasiaNet, Kaladze asserted that he received a “very competitive offer” from the Russian company, an idea that stirred fears in some Georgians who still bear suspicion towards Russia following the 2008 Russo-Georgian war, which resulted in the military occupation of the unrecognized republics of South Ossetia and Abkhazia.

Many Georgians are intent on breaking any dependence on Russia and integrating more fully into the European community. The United National Movement (UNM), the country’s largest opposition party, has scheduled a rally on March 6 to protest any new deals with the Russian company, Civil.ge reports. On February 24, Davit Bakradze, leader of the UNM parliamentary group,stated that the protest is about “making our voice heard to the government that the Georgian people will not allow return of the epoch of Russian darkness to Georgia.”

It is important to note that Georgia already receives 10% of its natural gas from Gazprom in the form of a fee for allowing Russia to transport gas to Armenia through its territories. According to Energy Minister Kaladze, any potential deal would at best only raise Russian supply from 10% to 12% of the country’s national demand. Georgia’s southern neighbor, Azerbaijan, currently supplies the other 90%.

When informed about the potential Georgia-Gazprom deal, Azerbaijan reacted with indignation. An Azeri news source, Trend News Agency, offered its own reason for Georgia’s ploys with Gazprom, which is “to create the appearance of competition in the gas market…to make SOCAR [State Oil Company of Azerbaijan Republic] lower down prices for the supplied gas, which are already quite low.”

The idea that Georgia is testing the waters of the market may not be quite so far off the mark. Georgia has already expressed interest in considering trade negotiations with Iran, where the lifting of global sanctions has spawned a huge supply of natural gas ready to hit the market. On the other hand, some Georgians are cautious of purchasing their gas from Iran because it would require transporting the gas through Armenia. Reversing the current order, where Russian gas is transported through Georgia to reach Armenia, could significantly reshuffle Transcaucasian geopolitics and vulnerabilities, giving Armenia the new upper hand. In any case, Gazprom would still be profiting off the solution, as the pipelines stemming from Iran to Armenia are currently operated by the company. In fact, Gazprom has been usingthis reversal as pressure on Georgia to accept monetary payments instead of gas as its current transportation fee.

While the prospect of buying gas from Iran seems dim for the moment, Georgia is considering accepting monetary payments in place of gas, Vzglyad reports.

“It is all going to depend on the sum they [Gazprom] offer us for the transportation,” Deputy Minister of Energy Mariam Valishvili proclaimed.

All this goes to show that no matter what happens, Russia (through Gazprom) is going to continue playing a large role in powering the region. Although that might result in more affordable gas prices for Georgian residents struggling through a cold winter, former Georgian minister, Giorgi Tughushi, perhapssums the situation up most concisely.

“Georgia should expect Russia’s President Vladimir Putin to come out of that pipeline,” Tughushi stated.