No deal reached yet over transit fees

TBILISI (Reuters) – Georgia and Azerbaijan failed to reach an agreement over transit fees for a planned gas pipeline from the Caspian Sea to eastern Turkey at talks in London last week, a Georgian official said yesterday. But Georgy Chanturia, head of the state Georgian International Oil Corporation (GIOC), said he hoped the two sides would reach an accord soon. Our recent negotiations in London did not resolve the tariff problem finally but brought our views closer, Chanturia told Reuters. Georgia had initially agreed to transport Azeri gas across its territory for $2 per 1,000 cubic meters, but backpedaled after the World Bank advised that the tariff was too low. Georgia then asked for between $5-$10 per 1,000 cubic meters. We did not just discuss figures, but some alternative proposals of getting transit fees such as partly money and partly gas at a fixed price, Chanturia said. He said an aspect of the initial agreement giving Georgia the right to purchase a fixed amount of gas from the pipeline at a fixed price would be retained. Another round of talks will take place in the Azeri capital Baku next week, Chanturia said, adding that Georgian President Eduard Shevardnadze was likely to travel to Azerbaijan to sign an inter-governmental agreement by the end of September. The proposed pipeline would ship gas from Azerbaijan’s giant offshore Shakh Deniz field operated by British oil company BP. Earlier this year, Azerbaijan signed an agreement to supply Turkey with 2 billion cubic meters (bcm) of gas from 2004-2005, rising to 6.6 bcm by around 2006. Turkey is also discussing a delay in the repayment of part of some $5 billion it is due to remit to the IMF in 2002.

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