Kazakhstan eyes share of Georgian gas pipelines

ASTANA, March 31 (Reuters) - Kazakh firms should get part ownership of
Georgia's gas pipelines in return for supplying gas, President
Nursultan Nazarbayev said on Thursday, one day after Kazakhstan
muscled in on a huge international oil project.

Nazarbayev was hosting Georgia's President Mikhail Saakashvili on his
first visit to the energy-rich Central Asian state, which lies across
the Caspian Sea from Georgia.

Saakashvili told a joint news conference that Georgia's energy needs
would double when new power stations, now under construction, came on
stream. "Kazakh gas could come to Georgia," Nazarbayev said. "Kazakh
gas suppliers would need to get a large share of control over the
pipeline system in Georgia."

Saakashvili did not comment on the suggestion and neither president
explained how Kazakh gas would get to Georgia, which relies on
supplies from giant neighbour Russia, where pipelines are controlled
by gas monopoly Gazprom.

Gazprom also wants to own the pipelines, which it uses to supply gas
to Georgia and Armenia.

But the United States, where Saakashvili has close ties, is against a
Gazprom buyout, fearing the monopoly power of the world's biggest gas
firm in the tiny Georgian market.

Georgia is also the route for the Baku-Ceyhan pipeline, along which a
BP-led consortium is due to start pumping oil later this year,
including crude produced in the Caspian.

BP and Norway's Statoil also plan to build a gas pipeline from
Azerbaijan to central Turkey via Georgia later this decade, which will
run parallel to Baku-Ceyhan.

Despite its fabulous energy wealth, Kazakhstan faces the problem of
getting its oil and gas to distant markets.

An ENI-led international consortium has a 40-year production sharing
agreement to develop Kazakhstan's offshore Kashagan oilfield, which is
due to start pumping oil in 2008.

After trying for months to get into the project, Kazakhstan agreed the
purchase of half of BG's $1.8 billion, 16.67 percent stake in the
giant field.

Kazakhstan has also proposed selling gas to China, and is studying the
possibility of building a pipeline eastwards.

03/31/05 09:03 ET

From: Emil Lazarian | Ararat NewsPress