Georgia Without Gas Storage

The FINANCIAL -- Energy security is an integral part of national security. That is why it is important that the risks of suspension or cease of energy supplies are subject to control and do not cause critical threats to the country. The increasing dependence on electricity and gas imports creates advantage to other countries to have an influence and intrusion of its interests. It is noteworthy that the security and bovver of the country may cause not only supply interruptions, but also threatening to terminate supply and obtain economic or political benefit in return for assistance in critical situations.

We all remember winter of 2006 when suddenly supply of gas stopped to Georgia, which led to the re-emergence of energy crisis in the country due to low winter temperatures. Supplier was reporting that the termination of gas supply related to technical problems, although the experts regarded this reason as groundless. Despite the diversification of the supply, Georgia is still fully dependent on imported natural gas from abroad and share of single supplier nowadays is still large in the volume of total import.

Many countries use natural gas storage as best ways to ensure energy security, because robust and sufficient gas storage facilities are crucial to energy security and resilience in times of major supply disruption. The EU strategy aims to exploit the potential of liquefied natural gas (LNG) and gas storage to make the EU gas system more diverse and flexible, thus contributing to the key Energy Union objective of a secure, resilient and competitive gas supply. It is important for Georgia to be able to secure protection against technical hurdles, diversities and emergencies.

Georgia is the only country in the region with no gas storage available that could allow to balance natural gas demand for winter and summer periods independently. Besides, unavailability of gas storage facility puts country to face risk in case of unplanned stoppage of gas supplies. There are no alternative ways of sourcing and getting protection against critical accidents.

The fact is that it is vital for Georgia to create alternative sources of gas supply and create safety reserve. It is necessary to develop strategic infrastructure that will exclude political trade leverage when Georgia is fully dependent on imports from specific countries.

In addition to gas storage, it is important that Georgia think about the development of a liquefied natural gas (LNG) terminal on the Black Sea. Alternatively, consider development a combination of gas storage and LNG terminal that will create additional value and provide a commercially profitable position not only for Georgia but also for the region. The LNG terminal will create alternative export solutions, as well as the possibility of gas import possibility from the sea.

European countries are developing infrastructure of alternatives sourcing of gas to reduce dependence on only one particular country and weaken the leverage of political trade by the supplier country. Poland and Lithuania have completed construction of a LNG terminal. The terminal construction in Estonia expected to complete by 2020. Polish LNG terminal was crucial for Ukraine to manage receive gas through the Polish-Ukraine interconnector. Gas storage was the single most important channel for responding to both the 2009 Russia – Ukraine gas disruption in Europe.

The regulation of the International Maritime Organization (IMO) should be taken into consideration, which limits sulfur content in marine fuels to 0,5% from January 2020. Many ship owners and ports of European countries are preparing for sulphur content limitation and develop infrastructure to supply LNG as marine fuel to ships.

Georgia must define priorities and find its niche in the Black Sea region, at the crossroads of global energy players interests. It is important to create solutions and additional value for the region to strengthen the positions of the country's energy security and independence.
About the Author: Jaba Tarimanashvili is a Business Analyst, Maritime services and Freight forwarding professional in Georgia, Director of Trans Logistic LLC.