Georgia to Pay More Than Double for Gas

By MARIA DANILOVA

MOSCOW – Georgia will pay more than double what it pays now for Russian natural gas under an agreement signed Friday, a top executive with Russian gas giant OAO Gazprom said, in a deal that could potentially threaten its fragile economy.

Before Gazprom’s announcement, Georgia had said it would buy gas from Azerbaijan instead of Russia. But Georgian Prime Minister Zurab Nogaideli said late Friday that Azerbaijan would not be able to supply gas in the early part of 2007 and Georgia would have to purchase Russian gas instead.

Alexander Medvedev, the head of Gazprom’s export division, told reporters in Moscow that Gazprom had signed three contracts to supply Georgia with natural gas at $235 per 1,000 cubic meters next year.

Three Georgian companies will receive 1.1 billion cubic meters of gas next year under the deal – an amount that falls short about 700 million cubic meters short the country’s expected demand for 2007.

Medvedev expressed satisfaction that at least “the main demand” was met.

“Clouds have dispersed, the sky has cleared and we can look into the future with optimism,” he told reporters.

Georgia, which now pays the $110 had long balked at the higher price, accusing Russia of “political blackmail” and of using its vast energy resources to punish the former Soviet republic’s Western-leading policies. Earlier this week Gazprom – Russia’s state-controlled natural gas monopoly – had threatened to cut off supplies if the new price was not accepted.

The Ministry of Energy of Fuel confirmed that several Georgian companies had signed contracts with Gazprom, but refused to identify them.

Russia’s relations with its small Caucasus neighbor hit its lowest point in years when Georgia briefly detained four Russian military officers on spying charges this fall. Moscow retaliated with an economic and transport blockade and a crackdown on Georgian migrants.

Under President Mikhail Saakashvili, Georgia has become a stalwart U.S. ally., seeking membership in NATO and pushing for closer ties with the European Union.