KazTransGaz is not for sale and will not cave in

The management of KazTransGaz (KTG) are negotiating with their
Georgian partners on the joint-venture KazTransGaz-Tbilisi - a state
oil and gas corporation of Georgia - on fulfilling earlier reached
agreements.

"The situation in St. Petersburg is at the stage of negotiations. We
have done everything on our side to have the enterprise working
normally, however, the Georgian partners, by force of objective and
subjective circumstances, do not fulfil their obligations. The essence
of the agreements is, firstly, providing the Georgian side
KazTransGaz-Tbilisi with gas from neighbouring Azerbaijan at an
acceptable price and, secondly, raising the rate for services to the
population to the standard level. We have a temporary problem with
these issues. It is the main problem we want to solve in the near
future," Director-General Serik Sultangaliyev told VK.

He also recalled that by order of the Kazakh president, KTG arrived in
Georgia with its own investments. The parent company of KTG
KazMunayGaz (KMG) won a tender in 2007 on privatising the gas
distributing station Tbilgaz.

"In a short time we put all the gas pipelines in order, installed gas
meters, and increased collections from 30% to 90%. These measures made
KTG-Tbilisi a very attractive company. We invited investments from
foreign banks. The overall investment value estimates $100 million,"
Serik Sultangaliyev notes.

Serious disputes between the Kazakhstan and Georgian partners started
last summer. The Kazakh side believes that the disputes are between
the supplier - Georgian State Oil and Gas Corporation (GSOGC) and KMG.
The problem is the different views on prices when buying fuel,
Chairman of the Board of KMG Kairgeldy Kabildin said, declaring that
the GSOGC supplier buys gas at a very high price.

At the same time there is a different point of view on the same issue.
"A mountainous country lacks its own supplies of gas and oil, but has
a rich neighbour, Azerbaijan, ready to supply gas. However, the main
condition is payment in cash. That is why the Georgian company prefers
to buy natural gas from Russia's Gazprom using non-cash payments but
at a higher price," - an anonymous source from KTG told VK.

The Kazakh company wanted to sell the assets after realizing the
problems with the Georgian partners in 2008. Kairgeldy Kabildin always
had one answer to the journalists' question about the gas distributing
station in Tbilisi: "No, we are not selling KazTransGaz-Tbilisi.
However, there are no assets that aren't for sale or purchase. It's
only a matter of price".

The Kazakh company plans to get back the funds it spent on the
modernization of the gas distributing station. KTG purchased assets in
form of Tbilgaz real estate and movables for $12.5 million and
declared its intension to invest $82 million in the gas distributing
system of Tbilisi. The company has already invested $45.5 million in 2
years.

Despite the diplomatic assurances of the KMG authorities that they are
not planning to sell the rest of KazTransGaz-Tbilisi, they are still
searching for purchasers. One of them is the State Oil Company of
Azerbaijan, which has a wide business of gas distributing in Georgia.

 "Azerbaijanis have prosperous logistics of business in Georgia. They
have gas for Georgia and a place to sell it, increasing their
influence in the Caucasus," a KazTransGaz source told VK. Sources in
the Azerbaijani oil company confirmed the negotiations on the
buying/selling of the Georgian gas distributing station, but it is
only a matter price.

Kiulpash Konirova, Astana. Exclusively for VK