Gazprom to double Georgia charges

Energy Trade

Russian energy giant Gazprom has said it will more than double prices of gas supplies to Georgia from 2007.

Gazprom said it would charge Tbilisi $230 (€180) for 1,000 cubic meters of gas, compared with the $110 cost now. Russia has often been accused of using Gazprom, a state-controlled natural gas monopoly, as a political weapon to keep its neighbours in line. Georgia's foreign minister is in Moscow for talks in an effort to defuse tensions between the two nations. Gela Bezhuashvili will take part in the first high-level talks between Georgia and Russia since a diplomatic crisis soured bilateral relations in September. The crisis began when Georgia, which relies heavily on Russia for exports and imports, arrested four Russian officers for alleged spying. The Kremlin hit back with an air, sea and postal blockade on Georgia and a crackdown on Georgian migrants in Russia.

A ban on key Georgian exports, such as wine and mineral water, has also been in place for months, with Russia citing health concerns. Last month, Georgia's biggest gas importer, Energy Invest, claimed that Gazprom was looking to raise 2007 prices to between $170 and $250. Georgia will buy 360 million cubic meters of gas from Gazprom next year, up from 250 million cubic meters this year. Gazprom has said it will stop subsidizing economies in the former USSR and will look for payments closer to its European export prices, currently at around $230-$250 per 1,000 cubic meters. After the Gazprom announcement Georgia's state minister for economic reforms, Kakha Bendukidze, said the increase had been expected.

"I don't know if this price is final but to me it is clear that this is not a market price, this is a political decision," Bendukidze told the Reuters news agency. Bendukidze said he would be observing what price Gazprom offered to Georgia's neighbours Azerbaijan and Armenia. Relations between Georgia and Russia have been rocky since the 2004 election of Georgian President Mikhail Saakashvili, who wants to boost ties with the West and join Nato in 2008. Last week, President Vladimir Putin accused the Georgian leadership of wanting to retake the breakaway territories of Abkhazia and South Ossetia by force. (BBC NEWS)

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