Georgia will Chair the Energy Charter in 2015

Georgia will Chair the Energy Charter in 2015

By Teona Surmava

In Astana, on 26th of November, 2014, a meeting between Georgian Energy Minister Kakha Kaladze and European Energy Charter Security General Urban Rusnak revealed that Georgia will host the 26th Energy Charter Conference—The Charter's top governing and decision-making body. During the 25th Conference, Kaladze pointed out that Georgia is a reliable partner which can contribute to energy security development in the region.

The Energy Charter Treaty was signed in December, 1994 and entered into legal force in April, 1998. The Treaty is a legally-binding multilateral instrument which aims to strengthen the rule of law on energy issues. By 2015, the Treaty has been signed by 52 states, Georgia has been a member of the Charter since 1995. The Energy Charter Conference is an inter-governmental organization, with all states who have joined the Treaty being members of the Conference. This allows countries to meet on a regular basis and discuss issues related to energy cooperation.

Recent geopolitical developments in Eastern Europe have once more sparked a debate about the potential vulnerability of EU countries to energy shocks. The European Commission has re-affirmed the importance of the development of the Southern Corridor, a project aiming to connect Europe to Caspian and Middle Eastern gas fields and to increase energy security in the EU’s natural gas market.

Georgia’s geographical location makes its strategic role important; it can serve as a transit corridor for energy resources. Hosting the Conference in Georgia will foster the country's engagement into international energy projects aimed at achieving energy security in the region.

For the “flagman initiative” of the Conference, Georgia is prioritizing the electricity transit as a subject for discussion.

Georgia as the transit country in the region is interested in developing electricity trade relations

Georgia as the transit country in the region is interested in developing electricity trade relations. Under the flagman initiative, Georgia is planning on forming working groups as a platform to discuss electricity trade and transit related issues. These groups are: East-West Electricity Transit (SWET) group, including Azerbaijan, Georgia, Turkey and North-South Electricity Transit (NOSET) group. NOSET will bring together Russia, Georgia, Armenia and probably, Iran.

Georgia contributes to the Southern Gas Corridor through the South Caucasus Pipeline (SCP) project, which is highly recognized and prioritized by the European Union. The South Caucasus Pipeline (SCP) runs from Sangachal Terminal in Azerbaijan to Erzrum, Turkey via Georgia.

The governments of Azerbaijan and Turkey have signed an agreement on June 2012 to build a second pipeline, parallel to SCP, that should be completed by 2018. This second pipeline, called Trans-Anatolian-Pipeline (TANAP), is expected to increase the overall transportation capacity by an additional 16 bcm per year. Georgia is an important energy partner for both Turkey and Azerbaijan and TANAP is planned to run from the Georgia-Turkey border through Anatolia and follows a 2,000 kilometer route to reach Greece.

In addition to these pipelines, Georgia has the potential to be part of Liquefied Natural Gas (LNG) project. On December 8, 2014, the head of State Oil Company of Azerbaijan (SOCAR) reiterated the intention to add a LNG project to the Southern Corridor, the Azerbaijan-Georgia-Romania Interconnector (AGRI). In this regard AGRI is the first LNG project in the Black Sea region. The project aims to transport natural gas from the Caspian region to Europe and was designed as a significant part of the Southern Corridor. Gas would travel via pipeline to the Georgian coast where it would be liquefied and shipped to Romania. From that point, natural gas would be transported via the Romanian natural gas transmission system to Hungary and – from there - on to the rest of Europe. The capacity of AGRI has not been decided yet but is expected to range between 2 and 8 bcm per year.

In a nutshell,

the fact that Georgia will host the 26th Conference in 2015 is a historic event for the country

the fact that Georgia will host the 26th Conference in 2015 is a historic event for the country and can intensify negotiations over Georgia's engagement into international projects. The impact of the Caspian gas reaching the EU market through the Southern Corridor is likely to become significant with time. The realization of the infrastructure needed to transport the Caspian gas to Europe is proceeding at a good pace and now, as Georgia enters the next phase in energy sector development, its role as a transit country in the region, is increasing significantly and can serve as an essential element of the Southern Gas Corridor.

Teona Surmava is a research fellow at Georgia's Reforms Associates GRASS. She has a masters degree in Nationalism Studies from the Central European University. At GRASS she works on the harmonization of the Georgian energy sector with the regulatory framework of the Association Agreement.