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GEOGRAPHICAL
LOCATION:
Georgia is situated on the
Black Sea at the junction of Eastern Europe and Asia. Georgia borders Russia to
the North, Turkey and Armenia to the south-west, Azerbaijan to the south-east,
and the Black Sea to the West. Georgia’s
population was estimated to be around 5.4 million in 1993.
In the past Georgia’s favourable climate conditions with prosperous
agriculture and tourism sectors enabled the population to enjoy a better
standard of living and education.
ECONOMIC
PROSPECTUS: PIPELINES, OIL & GAS TRANSIT, OIL & GAS RESOURCES AND POWER
INDUSTRY.
Under the International Monetary
Fund’s (IMF) close supervision, Georgia has adopted a tight monetary policy
and is making good progress with economic reforms.
Notable commercial interest has
also been generated in Georgia by the Azerbaijan International Operating
Company’s (AIOC) taking some of its “early oil” west through Georgia to
Supsa, near the Black Sea port of Poti. The
Construction of the 225-km-long early oil pipeline (the so-called western
route) and the oil terminal in Supsa is completed. The cost of the project was
US$400m. The next challenge for Georgia is the construction of a new oil
refinery at Supsa, and also of the main export pipeline (MEP) from Baku to
Ceyhan in Turkey via Tbilisi. The route is agreed by the major participating
countries. The estimated cost of construction is from $2.4bn-$3bn.
The interested parties are hoping to start construction in the first
quarter of 2001. An existing 232km oil pipeline between khashuri and the coast
at Batumi is also to be renovated to serve Chevron’s needs. Total cost is
estimated at $70 million. Conoco
(US) is planning to invest $250 million in a project to supply liquefied gas
from Caspian Region through Georgia to Turkey and other states on the Black
Sea.
The construction of the Khodorsky Hydroelectric Plant
in north-Georgia will be entirely financed by China’s state-owned Sichuan
Electric. The cost of the project
is estimated at US$27m. A tender on rehabilitation of Georgia’s largest
hydroelectric plant “The Inguri” is also underway.
Georgia has of its own oil and
gas reserves both offshore and onshore and the hydro-power potential to be a
regional exporter of energy. Total
Georgian oil reserves are estimated at 580 million tonnes, including 200
million tonnes in offshore fields. The development of Georgia’s indigenous
energy resources and production is vital. The IFI’s are working closely with
Georgia in the energy sector to rehabilitate existing capabilities (thermal and
hydro) and to restructure the national energy concern “Sakenenergo”.
Five major western Oil & Gas extraction companies are working
alongside the Georgians to achieve this aim. Two British companies are taking
lead in developing and extracting local oil and gas in Georgia: JKX Oil &
Gas and Ramco Energy. Air BP,
which is a branch company of BP Oil, signed a contract that envisages the
installation of a new aircraft re-fuelling facility at Tbilisi international
airport. Frontera Resources Corporation has invested around $30 million in the
past two years to explore six deposits, the first of which, the Taribani field
came on stream in March 2000. Drilling of the next three wells at Taribani is
likely to require additional investment of US$70-80 million.
Frontera also plans to start drilling at the neighbouring Mirzaani and
patara Shiraki fields.
Lasmo and Shell Capital (UK) are
also involved in developing Taribani field. They have already invested 7$ million and planning to invest
another 20$ miillion more.
Anadarko petroleum plans to
spend 1$-$2 million on seismic in the Georgian waters of the Black sea after it
farmed-in to the 8,900 sq km West Georgian Offshore PSC.
The Greek State Oil Company has also recently held negotiations with the
Georgian government to develop the Norio site near Tbilisi.
The EU plans to assist Georgia in the formation and development of its
gas sector and supports its participation in regional transportation and energy
projects.
MAJOR
NEW NATURAL GAS FIELDS:
Until
recently Georgia was almost entirely dependent on imports of gas. However,
Georgia is now producing its own gas. Since
December 1999 Georgia UK Joint venture (GBOC) has been supplying Tbilsresi with
natural gas extracted from the Ninotsminda deposit at a site near Tbilisi.
Seismic data has indicated that the field contains reserves of at least
30 billion cubic meters of gas, and forecasts for the neighbouring Manavi field
are even higher, at 40 billion cubic meters. Further exploration is under way
at the Nazvrevi field, which is also expected to contain large gas reserves.
WHY
INVEST IN GEORGIA?
The Georgian Government
has created a real favourable atmosphere to attract foreign investments to the
republic. In September the profit
tax for foreign contractors in the oil & gas sectors was cut from 10% to
4%. Economic progress, which has
become evident since Georgia’s commitment to reform policies, heavily
supported by the IMF and the World Bank has brought huge revival to the
industrial sector. At the end of
1996 official data showed a GDP increase of 11% to US$3.5billion.
The same figure is quoted at the end of 1997- 11.1% to US$4.9 billion.
FACTS:
Foreign companies and
banks have become increasingly active in developing Georgian transport
infrastructure particularly to upgrade the Batumi port. Three oil-loading
berths need overhauls, and the oil-loading terminal at the Batumi refinery will
also be modernised.
GIOC plans to begin
construction of a modern oil refinery at Supsa by late 2000 and first
production line will be completed within 18 months. The entire project is
expected to cost $300 million. Japan’s Itochu is the main contractor.
The first line will have the capacity to refine 3 million tonnes of
crude oil each year.
WHY GIOGE?
Georgia is situated
along the shortest commodity, electrical, oil and gas trade and transit
corridor to the West from Azerbaijan, Armenia and the Central Asian republics
and also forms a north-south bridge between Russia & Turkey.
Georgia is a country with huge opportunities.
The Georgia International Oil & Gas Show will be the first
exhibition of its kind; exclusively a showcase for international, national
& CIS products and services. It
will enable you to introduce new and exciting product lines to brand new
clients and also establish long-tern trade relationships.
As manufacturers and suppliers of oil & gas equipment, products and
services, it will give you a unique opportunity to become part of one of the
greatest economic & industrial transformations of the 21st
century.
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