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Gazprom says Georgia does not want Russian gas

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Gazprom [RTS: GAZP] interprets Georgia's silence on the amount of gas it needs in 2007 as a refusal to receive Russian natural gas next year, a gas monopoly spokesman said.
MOSCOW, December 22 (RIA Novosti) - Gazprom [RTS: GAZP] interprets Georgia's silence on the amount of gas it needs in 2007 as a refusal to receive Russian natural gas next year, a gas monopoly spokesman said.

"A few days ago, Gazprom's leadership sent letters to Georgia asking it to specify the amount of gas it wants to buy from Russia in 2007," Sergei Kupriyanov said.

"But we have received no reply, and Georgia has even indicated it has no desire to address the issue," he said.

Gazprom has set the price of natural gas for Georgia at $235 per 1,000 cubic meters and asked Georgia to stipulate the amount of gas it needs, and to then sign a corresponding contract, or otherwise gas that could have been bought by Georgia would be sold elsewhere.

Georgia, which has until now received most of its natural gas from Russia at $110 per 1,000 cubic meters, initiated talks with neighboring Azerbaijan and Turkey to find alternative sources of gas after Gazprom said it would double the current gas price for Tbilisi to $230 per 1,000 cubic meters as of 2007.

Georgian Prime Minister Zurab Nogaideli said Wednesday that Azerbaijan will be Georgia's main natural gas supplier from 2007, adding that at the end of this week, Baku will start supplying gas from its Shah Deniz field in the Caspian Sea to Georgia.

Georgian President Mikheil Saakashvili said in mid-November that his country will not buy Russian natural gas at the new rate because it is not a fair market price at a time when some of Georgia's neighbors are paying $65 and $110 per 1,000 cubic meters in real terms.

The president said the price was politically motivated and that the move amounts to an economic blockade of Georgia.

But Kupriyanov said the new price reflects the company's strategy to apply market mechanisms to pricing gas in its trade with the Commonwealth of Independent States (CIS), a loose confederation of former Soviet republics.

Gas prices for former Soviet republics must cover gas production, preparation and transportation expenses, and also yield profit commensurate with revenues received from gas sales on Western European markets, he said.

CIS countries currently pay not more than $110 per 1,000 cubic meters of gas, compared with an average rate of $230 charged by Gazprom for its exports to Europe. Gazprom has already proposed to CIS states that they pay more than $200 per 1,000 cubic meters from next year.

Gazprom is currently carrying out measures to gradually bring gas prices for CIS states up to the European level, taking into account the distance of deliveries.

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