Georgia: Georgia Gas Profile 2011

Facts about Gas

Georgian Main Gas Pipeline System has been operating since 1959, upon launching the first Tbilisi-Karadag Main Gas Pipeline in Transcaucasia.

At the initial stage only Tsiteli Kxidi-Tbilisi 500 mm diameter and 50 km long gas pipeline was functioning alogside with Gardabani, Rustavi and Navtlughi gas distribution stations. In 1963 Ordjonikidze-Tbilisi 700mm gas pipeline was put into operation, thus making possible Georgia to receive natural gas from two different providers - Russia and Azerbaijan.

In 1967-1968 700mm and 800mm gas pipelines became operational in parallel with Tbilisi-Karadag and Ordjonikidze-Tbilisi pipelines. Kazakh-Saguramo 1000mm diameter and 89 km long gas pipeline has been functioning since 1979-80, while North-South 1200 mm pipelines became operational in 1988. Saguramo gas compression station has been operating since 1969 and Kvesheti - since 1980-81.

Georgian Main Gas Pipelines are designed to transport natural gas to Georgian consumers and to provide gas transit to Armenia. Main Gas Pipeline is operated by Kazbegi, Kvesheti, Saguramo and Terdjola treasury branch offices.

Georgian Main Gas pipeline System comprises 9 gas pipelines: North-South, Kazakh-Saguramo, Karadag-Tbilisi, Vladikavkaz-Tbilisi, Saguramo-Kutaisi, Kutaisi-Sukhumi, Rustavi-Telavi-Djinvali, Tsiteli Kxidi-Tsalka-Alastani and Gomi-Khashuri-Bakuriani.

Natural Gas Market Regulations

Relations among natural gas suppliers, transportation and distribution licensees and direct customers are controlled by natural gas market regulations. Cut off or reducing of volumes of supply by the supplier or licensee is not permitted unless it is provided by the applicable law. In order to regulate gas supply and consumption, parties involved in natural gas sale and purchase or transportation procedures are allowed to conclude bilateral or multilateral agreements.

As transportation licensee - Gas Transportation Company is responsible: to fulfill in time supplier's instructions for natural gas supply, cut off or resupply; to comply with safety standards and follow safety rules.

The supplier or natural gas licensee (58 companies in total) is given the right to cut off supplies: if the customer fails to fulfill its obligations under the legislation, market regulations and the agreement; if such delay is caused by regular or emergency maintenance works; if it constitutes a threat to human life, health and property.

Companies providing transportation, supply, sale and purchase, distribution or consumption through gas distribution system should be capable to overcome the gas shortages in the case of such. According to market regulations, in the event of shortage of gas in transportation system limited or reduced natural gas supplies are allowed.

Being a natural gas transportation licensee, Gas Transportation Company is responsible to keep operational natural gas distribution system connected to the system of neighboring countries; to design and operate system in such manner so as to provide natural gas distribution system sustainability if one or more than one of the facilities are out of operation as a result of natural disaster, sabotage, emergency situation or other circumstances. In the case of gas shortages, gas volumes should be distributed fairly according to respective necessity. GTC is primarily to ensure provision with natural gas volumes customers producing electricity by means of natural gas.

According to market regulations, if the regular maintenance work causes delay in natural gas supplies, a person concerned should be informed at least 30 days prior to such delay. Delay of natural gas will be suspended if the above procedure is not followed.

Market regulations govern the procedures for submission of applications on natural gas purchase and transportation, as well as for the conclusion of an agreement. After signing the purchase agreement natural gas seller is obliged to apply to transportation licensee with the request for transportation of natural gas and afterwards to provide with natural gas supplies within the ten days.

Customer shall send notice to GTC on increasing or reducing of gas supplies at least two days earlier. In the event of receiving natural gas volumes exceeding the nominated quantity, natural gas receiving party shall cover the costs of gas volumes above the nominated quantity or reimburse in terms of the same quantity of natural gas against the transportation or respective distributing licensee within the accounting period.

Natural gas supply and transportation system connection procedures are overseen by market regulations. A candidate should submit to transportation licensee a special request for connection to the transportation system. GTC shall decline the request if the connection to licensee's or direct customer's natural gas transportation system may have a negative impact on the whole transportation system. An approval of Georgian National Energy Regulatory Commission is compulsory for connection to transportation system of the customer with annual consumption of natural gas exceeding the 15 % of annual gas quantity delivered by the distributing licensee concerned. Connected facilities become operational upon covering all the costs of works carried out for connection to the system.

In the event of illegal gas consumption natural gas licensee is given the right to cut off gas delivery to the direct customer or distribution licensee. Unmetered gas delivery is not allowed. Gas meters should be placed in natural gas system at both sides of demarcation point for gas receipt and delivery points of the licensee.

Georgian Oil and Gas Corporation (GOGC)

Georgian Oil and Gas Corporation oversees the operation of Gas Main Pipeline System in line with oil and gas pipelines.

One of the primary points in GOGC's activity lies in rehabilitation and replacement of Main Gas Pipeline System; design and construction of oil and gas pipelines; creation, development and operation of proper infrastructure.

GOGC's activity is mainly focused on exploration and production of oil and gas resources and respective design planning; providing transit, export, import as well as storing, preparing, refining, recycling and realizing of oil and gas materials and end-products both within and outside the Georgian territory along with conducting marketing operations.

Georgian Oil and Gas Corporation LLC was established on 21, March 2006 by the decree of Minister of Economic Development of Georgia with its 100% shares fully owned by the government. The government owned shares of JSC Georgian International Oil Corporation, JSC Georgian International Gas Corporation and JSC Saknavtobi were accumulated in GOGC authorized capital.

GOGC is supervising Gas Main Pipeline System through its subsidiary Gas Transportation Company. GTC is given an exclusive license for gas transportation. GTC operates and maintains high pressure gas pipeline system. Its main activity comprises transportation of natural gas through the territory of Georgia as well as provision of consumers with stable natural gas supply. It also ensures transportation of natural gas to Republic of Armenia. GTC is responsible for estimation of gas consumption, maintaining and overseeing the delivery schedule, evaluation of gas losses reasons and providing pipeline security.

Gas Transportation Company operates major gas pipelines and their offtakes with total length of 1939.52 km, 85 gas distribution stations and 5 gas metering stations. Total gas pipelines design capacity amounts to 55 MCM per day, correspondingly 20 BCM annually. Total gas pipelines geometric range is 551.151 m3.