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23 Dec, 2006 03:45

Russia and Georgia agree on gas prices

Russia and Georgia agree on gas prices

The conflict between Russia and Georgia over gas supplies seems to be fading away. The two countries have signed three agreements for Russia’s supplies of natural gas to Georgia at 235 USD per 1000 cubic metres starting next year.

“There is no doubt that deliveries to Georgia would take place. We have there contracts signed for more that 1.8 BLN cubic metres of gas,” Gazprom top executive Aleksandr Medvedev was quoted as saying.

However, there is one unresolved issue that still remains, that is the yet unsigned contract for the transit price of Russian gas via Georgia to neighbouring Armenia.

Georgia wants Russia to pay 8 USD for every 100 km it travels through the country. Russia thinks that is overpriced and says Georgia is asking for far more than the standard price. Nevertheless Moscow still hopes the contract will be signed soon.

“I can't imagine any reason why the contract would not be signed especially in view of the very preferable conditions which Georgia had during the current year and that we are ready to accept for next year,” Aleksandr Medvedev pointed out.

Georgia will have to pay twice the current price. It had long balked at the new price for Russian gas. Tbilisi accused Russia of what it called political blackmail and of using its vast energy resources to punish it for its western-looking policies.

Russia denies such accusations. It says gas supplies are stopped only when the old contract expires and not renewed. Moscow says the price increase is meant to bring prices up to competitive world levels.

“It refers to any customer with which we don't have any contract. If we don't have a contract we have no reason to deliver gas. And this applies not only to natural gas but to any product in the world, ” Aleksandr Medvedev said.

Russia says raising prices benefits the receiving countries, making them want to save energy and save money.