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RUSSIA'S GAZPROM WARNS IT WILL CUT OFF GAS TO GEORGIA IF IT DOESN'T AGREE TO HIGHER PRICE
By Henry Meyer, Associated Press Writer
The Associated Press
November 7, 2006 Tuesday 5:28 PM GMT
Russian state gas monopoly Gazprom warned Georgia on Tuesday that it
would cut off gas supplies by Jan. 1 unless Russia's small southern
neighbor agreed to pay more than double the current price.
The head of OAO Gazprom's export arm, Alexander Medvedev, told
reporters that unless Tbilisi signed a new contract for 2007 on terms
demanded by the Russian company, Gazprom would turn off the taps and
make only transit deliveries to Armenia through the pipeline that
crosses Georgia.
"If there is no contract, we will be obliged to supply only consumers
in Armenia. I wouldn't call this a cutoff. The lack of a supply
contract means no supplies," said Medvedev. He added that Georgia could
negotiate a lower price only if it offered some assets in exchange.
Gazprom last week said it plans to charge Tbilisi $230 per 1,000 cubic
meters of gas, compared with the $110 that it pays now, ratcheting
up economic pressure against the U.S.-allied Caucasus Mountain state.
Georgian leaders said that the sharp price rise was obviously political
because other ex-Soviet nations were paying far less, and they vowed
not to pay a "non-market" price.
The threat raises the prospect of a repeat of the bitter New Year's
price fight with Ukraine, during which Gazprom temporarily cut off
the former Soviet republic's supplies this year.
The gas dispute, which was seen as retaliation for Ukraine's
pro-Western policies, briefly disrupted supplies to Western Europe,
provoking alarm about reliance on Russian gas. A cutoff of gas to
Georgia would not affect Gazprom exports to Europe, which pass through
Ukraine and Belarus.
Since Kremlin-friendly Prime Minister Viktor Yanukovych came to office
this year in Ukraine, Kiev has managed to limit the price for 2007
to $130.
Gazprom, which has been criticized as a tool of Kremlin policy, denied
that politics had played a role in the demands of Georgia. The Russian
gas behemoth says it has decided to end subsidized gas tariffs for
other former Soviet nations and is moving toward market prices.
Russian ally Armenia is paying a price for Russian gas of $110 that
will stay fixed until the end of 2008.
But Medvedev said this was negotiated last year and the agreement
included clauses handing control of key energy facilities to Gazprom,
including the Armenian segment of a planned pipeline bringing Iranian
gas to the country, which is due to open later this year.
Neighboring Belarus, whose authoritarian leader Alexander Lukashenko
has signed a loose union treaty with Russia, faces a fourfold rise
in gas prices to $200, although Gazprom is believed to be willing to
compromise if the country hands over 50 percent of the state pipeline
through which Russian gas transits to Western Europe.
Relations between Tbilisi and its former imperial master Moscow have
been frosty because of Georgia's decision to align itself with the
West and seek membership in NATO and the European Union.
Ties suddenly worsened after Georgia detained four alleged Russian
spies in late September and Russian authorities retaliated with a
sweeping transport and postal blockade and a crackdown on Georgian
businesses and migrants in Russia. The remittances they send home
total hundreds of millions of dollars a year and are important for
the struggling Georgian economy.
By Henry Meyer, Associated Press Writer
The Associated Press
November 7, 2006 Tuesday 5:28 PM GMT
Russian state gas monopoly Gazprom warned Georgia on Tuesday that it
would cut off gas supplies by Jan. 1 unless Russia's small southern
neighbor agreed to pay more than double the current price.
The head of OAO Gazprom's export arm, Alexander Medvedev, told
reporters that unless Tbilisi signed a new contract for 2007 on terms
demanded by the Russian company, Gazprom would turn off the taps and
make only transit deliveries to Armenia through the pipeline that
crosses Georgia.
"If there is no contract, we will be obliged to supply only consumers
in Armenia. I wouldn't call this a cutoff. The lack of a supply
contract means no supplies," said Medvedev. He added that Georgia could
negotiate a lower price only if it offered some assets in exchange.
Gazprom last week said it plans to charge Tbilisi $230 per 1,000 cubic
meters of gas, compared with the $110 that it pays now, ratcheting
up economic pressure against the U.S.-allied Caucasus Mountain state.
Georgian leaders said that the sharp price rise was obviously political
because other ex-Soviet nations were paying far less, and they vowed
not to pay a "non-market" price.
The threat raises the prospect of a repeat of the bitter New Year's
price fight with Ukraine, during which Gazprom temporarily cut off
the former Soviet republic's supplies this year.
The gas dispute, which was seen as retaliation for Ukraine's
pro-Western policies, briefly disrupted supplies to Western Europe,
provoking alarm about reliance on Russian gas. A cutoff of gas to
Georgia would not affect Gazprom exports to Europe, which pass through
Ukraine and Belarus.
Since Kremlin-friendly Prime Minister Viktor Yanukovych came to office
this year in Ukraine, Kiev has managed to limit the price for 2007
to $130.
Gazprom, which has been criticized as a tool of Kremlin policy, denied
that politics had played a role in the demands of Georgia. The Russian
gas behemoth says it has decided to end subsidized gas tariffs for
other former Soviet nations and is moving toward market prices.
Russian ally Armenia is paying a price for Russian gas of $110 that
will stay fixed until the end of 2008.
But Medvedev said this was negotiated last year and the agreement
included clauses handing control of key energy facilities to Gazprom,
including the Armenian segment of a planned pipeline bringing Iranian
gas to the country, which is due to open later this year.
Neighboring Belarus, whose authoritarian leader Alexander Lukashenko
has signed a loose union treaty with Russia, faces a fourfold rise
in gas prices to $200, although Gazprom is believed to be willing to
compromise if the country hands over 50 percent of the state pipeline
through which Russian gas transits to Western Europe.
Relations between Tbilisi and its former imperial master Moscow have
been frosty because of Georgia's decision to align itself with the
West and seek membership in NATO and the European Union.
Ties suddenly worsened after Georgia detained four alleged Russian
spies in late September and Russian authorities retaliated with a
sweeping transport and postal blockade and a crackdown on Georgian
businesses and migrants in Russia. The remittances they send home
total hundreds of millions of dollars a year and are important for
the struggling Georgian economy.