The FINANCIAL — The sharp rise of gasoline prices in Georgia has increased demand for compressed natural gas (CNG) sold at 1.10 GEL per gallon in Tbilisi vs. the 2.50 GEL per litre of gasoline.
CNG systems allow car owners to save fuel costs by up to 70 percent. The lack of adequate infrastructure in Georgia is hampering the use of CNG systems however, but industry professionals believe that the CNG business will grow this year due to the continuing rise of gasoline prices.
CNG is made by compressing natural gas, which is stored and distributed in hard containers at a pressure of 200-248 bar. It is used in traditional gasoline internal combustion engine cars that have been converted into bi-fuel vehicles. CNG is imported to Georgia by Azeri state company Socar and another state company – KazTransGas, belonging to Kazakhstan.
There are up to twenty CNG stations in Tbilisi, many of them owned by small enterprises. Eight of them are owned by Wissol Petroleum Georgia, one of the largest retailers in the country.
Public awareness of CNG is still low which makes gasoline the leader on the local market. Another reason for the disproportionate use of petrol compared to CNG is that CNG is rarely advertised. And the most important factor being that the installation of a CNG system requires upfront investment of up to 1,500 USD.
CNG cars available in Europe are bi-fuel vehicles burning one fuel at a time. Their engine is a standard gasoline internal combustion engine (ICE). This means that they can run on either gasoline from a gasoline tank or CNG from a separate cylinder in the trunk. The driver can select what fuel to burn by simply flipping a switch on the dashboard.
Several manufacturers (Fiat, Opel (General Motors), Peugeot, Volkswagen, Toyota, Honda and others) sell bi-fuel cars. In 2006, Fiat introduced the Siena Tetrafuel in the Brazilian market, equipped with a 1.4L FIRE engine that runs on E100, E25 (Standard Brazilian Gasoline), Gasoline and CNG.
Natural gas vehicles are increasingly being used in the Asia-Pacific region, Latin America, Europe, and America due to rising gasoline prices.
There were 12.6 million natural gas vehicles worldwide in 2010, up 11.6% over the previous year, led by Pakistan with 2.74 million, Iran (1.95 million), Argentina (1.9 million), Brazil (1.6 million), and India (1.1 million); with the Asia-Pacific region leading with 5.7 million NGVs, followed by Latin America with almost 4 million vehicles.
Gas installation for medium sized cars costs 2,000 GEL and for expensive cars – 3,000 GEL and up. Natural gas cars need to be checked every three years for which drivers pay 60 GEL. Besides these basic costs, using natural gas cuts transportation costs by half.
“Compared to fuel, natural gas costs about 50 percent less than gasoline. Added savings depend on the gas equipment, its quality, system generation, car type. In some cases savings can reach up to 70 percent,” said Nino Machabeli, Manager of Garant-gas, the company that operates CNG stations.
In one year Garant-gas transformed about 2,000 cars to CNG. The number of real customers and sales has increased three times during six months, according to the company’s statistics.
“During Easter gasoline prices will be increased again and the number of our customers will increase as a result of that,” said Vako Grdzelishvili, Director of Discovery Auto Gas. “Approximately 460 vehicles were transformed to gas by our company last year. We are situated near a Wissol petrol station and we see that more cars are coming to the gas station than to the petrol station. 95 percent of taxies use compressed natural gas and the majority of Marshutkas (minibuses) as well.”
“Soon the majority of cars in Georgia will be using compressed natural gas,” he added.
“The major benefit of using compressed natural gas is significant reduction in emission when compared to gasoline,” said Nino Machabeli. “Another reason is that natural gas cars pollute the environment less. Fuel price increases are painful for drivers on any type of income. That is why using compressed natural gas is profitable. Especially when we do not know how much the prices of fuel will be increased by,” she added.
Garant Gas and Discovery Auto Gas do not exclude raising the prices of CNG. “Natural gas started its realization from 40 Tetri. It now costs 1.10 GEL. It is possible that the prices of natural gas will increase as demand for it increases. But there will always be a significant enough difference between natural gas and gasoline for people to always choose natural gas,” said Vako Grdzelishvili.
“The prices of natural gas will remain stable in the near future. But even in the event of increasing natural gas prices, it will still cost less than gasoline,” added Nino Machabeli.
Oil companies do not acknowledge increased demand for natural gas in Georgia. “Fuel costs more now than in 2008. I cannot say that the high prices of oil have caused an increased use of natural gas,” said Shavleg Mishvelidze, representative of Lukoil. “The infrastructure of natural gas stations is not developed. I will not compare the number of petrol stations to the number of natural gas stations therefore. They are not widely present in the regions. Natural gas is not safe and we see lots of accidents where gas canisters explode inside the cars. The fact is that sales of natural gas have not yet reached the same level as those of gasoline,” he added.
“Oil import in Georgia did not decrease in 2011. The only thing that is evident from looking at the statistics is that there is increased use of diesel in Georgia,” said Giorgi Kotrikadze, Director of the Association of Oil Products Imports. “In regards to the use of natural gas, the problem is that special cars using natural gas are not widely imported in Georgia. People instead transform petrol cars to those run on natural gas. This is not safe. I do not see a trend of increasing use of natural gas in Georgia,” he added.
“Wissol has been working in the gas sector for years. We already have ten natural gas stations in Georgia,” said Soso Pkhakadze, Chairman of the Wissol Board of Directors. “The high prices of petrol are not the only reason why we are interested in the natural gas sector. We are investing more money in developing this sector. Drivers will always have an interest in using natural gas as it is cheap,” he added.
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