Georgia's transit future

New Europe
Georgia's transit future

In 2014, Georgia signed an Association Agreement with the EU to implement the bloc’s policies for sustainable energy development. By signing the Agreement and joining the Energy Community, Georgia took on the obligation to implement a reform package in the energy sector and lay the foundation for its approximation to the European energy market. New Europe in the article The future of Georgia’s energy policy writes, that during the many High-level Energy Cooperation Meetings – Georgia introduced, in detail, the ongoing and scheduled reforms in Georgia’s energy sector, discussed international cooperation, and highlighted Georgia’s interest to become an energy hub in the Caucasus/Black Sea region.

Within that framework of ongoing reforms in Georgia’s energy sector, and under the commitments of the Energy Community Agreement, Georgian officials held a meeting with Energy Community Secretariat, Janez Kopač at the end of 2018, which resulted in the government of Georgia submitting to the European Parliament a draft law on reforms in the Georgian energy market as well as the development and implementation of renewable energy sources, energy efficiency, and the energy performance of buildings. This new regulation will significantly contribute to the establishment of international business rules on the local energy market as well as the inflow of new investments. The final target is the harmonisation of the Georgian energy system with European norms and requirements.” as noted by Georgia’s Deputy Minister of Economy and Sustainable Development Natia Turnava shortly after her December 2018 meeting with Kopač.

While introducing the current Georgian government’s energy sector development strategy under the Economic and Development Ministry’s new head, George Kobulia,  Tarnava emphasised in late January that, “According to IMF, Georgia will have one of the most dynamic and fastest growing economies during the next 10-15 years. Of course, this is an excellent result, but at the same time it is a huge challenge for our energy sector – the growth of the economy will further increase the demand on the already high demand on the electricity”. “We have a very clear vision and a very effective, active, and aggressive plan to support local energy development on the one hand and on the other hand, to promote more active trade between the countries of our region and to offer our customers a choice between our own electricity and the possibly cheaper foreign energy. We also have a plan to make our consumption more energy efficient,” said Tarnava.

Georgia is considered one of the main transit countries of hydrocarbons from the Caspian region to Europe. Over the past decade pipelines such as the South Caucasus Gas Pipeline (SCP), Baku-Tbilisi-Ceyhan (BTC) and Baku-Tbilisi-Supsa pipelines have been successfully delivering Caspian hydrocarbon resources to Europe.

During the last Ministerial Meeting of South Gas Corridor Advisory Council in Baku, which was held in February 2018, the Georgian delegation paid special attention to the issue of transporting Azerbaijan’s hydrocarbons to the European market via Georgia and Turkey. The importance of the Southern Gas Corridor is for the diversification of gas supply, as well as the further enhancement of the energy security of Azerbaijan, Georgia and Turkey and the EU countries. The crux of the meeting in Baku was a conversation that also covered the trans-Caspian pipeline project, which aims to deliver Turkmen gas to the EU using the transit capacities of Georgia, Azerbaijan, and Turkey. “The development of the South Gas Corridor, as well as the expansion of the South Caucasia Pipeline and the completion of the Shah-Deniz 2 (in Azerbaijan), is of the utmost importance for our country,” ex-Development and Economy Minister Kumsishvili said during his visit to the Azeri capital last year.

Georgia is remarkably rich in hydropower resources, and also has potential when it comes to wind, solar, biomass and geothermal resources. This would allow for the creation of additional capacity by means of domestic and foreign investment. Georgia cooperates with one of the leading energy Companies in Turkey, Çalık Enerji, with the two having completed negotiations on the construction of a wind power plant with a capacity of 50 MW and an investment of $75 million that will be built in Georgia’s Shida Kartli region.

“This is, of course, a very important investment that will result in another new source of renewable energy in the electric power system of our country,” said Kumsishvili on February 20, 2018. The most recent South Caucasus Energy Summit was held in Tbilisi in May 2018. The forum focused on the development of energy infrastructure and connectivity within the South Caucasus region as well as ways of improving the regional energy ties, strengthen energy security and the sustainability of the natural gas and electricity supply.

At the time of the Energy Summit, a meeting was held with high-ranking US and Georgian officials from the economic sector that included the American Secretary of Commerce Wilbur Ross and Kumsishvili, who was still serving as Georgia’s Sustainable Development Minister. The officials discussed the development of the transit corridor that passes through Georgia and the involvement of both the US government and private American firms in the continued development of the transit process. Chief among the topics covered, all of which are considered fundamental to enhancing Georgia’s transit capability, were the transit corridors (TRACECA, Trans Caucasia International Transport Corridor or so-called middle corridor; Lapis Lazuli; Persian Gulf – Black Sea corridor, etc.) that pass through Georgia and to the efforts of the Georgian Government which aim to develop the transit corridors. The meeting also focused on the development status of significant projects such as the Anaklia Deep Sea Port, the East-West Highway, the Railway Modernization Project that will allow for the total amount of cargo turnover on the the Baku-Tbilisi-Kars railway line to triple in the coming years and the need for US’ Conti Group to continue participating in the project. The attendees also discussed the development of transit lines of petrol and gas from Asia to EU via Georgia and reiterated that the success of the Anaklia Port hinges on having the world’s largest operator of container terminals – SSA Marine from the United States.

Following up on last year’s discussions with US officials about the development of sea and port links, the first High Level Transport Dialogue with the EU was held in January in the hope that it would help facilitate expanded cooperation between the European Union and Georgia. The two sides discussed strategic issues such as the development of the trans-European transport network in the Eastern Partnership countries – of which Georgia is a member – and the EU’s strategy towards linking Europe, the Near East, and Asia through the continued construction of roads, railways, and seaports that are capable of delivering both energy resources and consumer goods, This bilateral strategy, according to the European delegation, remains key due to the fact that Georgia’s position as a regional player, in terms of road network logistics, grows every year.