Gazprom increases gas price for revolutionary countries :: Charter'97 :: News

Gazprom General Director Aleksandr Miller has announced that as of 2006 the majority-state owned Russian energy giant is planning to increase the price on natural gas supplied to Georgia and Ukraine.

This has led analysts in Georgia to state that Moscow is using economic levers for political ends, adding that this fully rebuffs arguments by government ministers earlier this year, when it was proposed that Georgia`s trunk gas pipeline be sold to Gazprom, that economics and politics and that the privatization of Georgian assets should be considered only in a business context.

They note that it is the two most Western oriented CIS countries, both of which have experienced velvet revolutions, have been singled out to pay higher tariffs. Indeed, newspaper Rezonansi reports that Russia has already increased the price of natural gas from USD 44 to USD 58 per thousand cubic meters for Ukraine since last year`s Orange Revolution.

Today one thousand cubic meter natural gas supplied by Gazprom costs USD 38 for Belarus, USD 52 for Armenia, USD 58 for Ukraine and USD 60 for Georgia. While from 2006, Armenia will continue to pay the same tariff, Georgia will have to pay USD 70 per thousand cubic meters.

Furthermore, Gazprom has ruled that it will not extend deadlines to cover debts, meaning that Georgia can expect to have its gas switched off unless it is able to cover its debts completely.

The decisions announced by Gazprom are viewed by Georgian commentators as sending a very blunt message: anyone who seeks to break free from Russian influence will not get any breaks in terms of supply of necessary products.

Given that Russia routinely uses its energy monopoly to try to achieve political aims, Georgian analysts stress the importance of developing alternative energy sources. One such source is the Shah-Denis gas fields in Azerbaijan: following completion of the South Caucasus pipeline, Georgia will receive five percent of the gas transited through the pipeline as tariff and will be able to buy a certain amount of gas - 200 million cubic meters in the first year rising to 300 then 500 million - at a privileged price of USD 55 per thousand cubic meters.