SOCAR’s participation in underground gas storage project to strengthen its positions on Georgian market

SOCAR’s participation in construction of the first underground gas storage in Georgia will strengthen the company’s positions in this country, said Ilham Shabanov, Director of the Azerbaijan Oil Studies Centre.

“Construction of the underground gas storage in Georgia is a strategic issue. This is not the matter of capital intensity of the project. Availability of underground gas storage in Georgia is the best option for regulation of Azerbaijani gas deliveries. If the Georgian officials agree to the project implementation, this means that positions of SOCAR at the Georgian market will be further stable,” Shaban added.

He also added that launching of the Shah Deniz Phase 2 will further strengthen SOCAR’s positions at the Georgian gas market, because “share of Azerbaijani gas export to Georgia will significantly increase at the expense of transit gas.”

According Georgian Energy Minister Kakha Kaladze said that according to the preliminary information, construction of the underground gas storage will cost about $230-250 million.

The gas storage will be built by China Tianchen Engineering Corporation (TCC).The memorandum of cooperation to implement the project was signed with the company in September 2015. The Chinese side has expressed readiness to join China Export & Credit Insurance Corporation (SINOSURE) and one of the world biggest banks – Industrial and Commercial Bank of China (ICBC) – into financing of this project.

The gas storage with the volume of up to 250 million cub.m. of natural gas will be built on the Samgor oil field, east of Georgia, average eocene horizon of which is considered optimal for the project implementation, according to the results of the studies.

Georgia is the only country on the Caucasus that has no gas storage. According to the specialists’ estimates, after the project implementation the country could store about 15% of its annual demand in gas. Georgia consumes over 2 billion cub.m. of natural gas a year and it is almost fully dependent on its import. During 2015 87% of the country’s need was covered at the expense of Azerbaijani gas. Georgia receives about 10% of volume of Russian gas for its transit through its territory to Armenia.—0—