Thursday, July 8, 2010

Georgia Selling Gas Pipeline that feeds Armenia

Gazprom may soon own Armenia's main supply corridor for natural gas, increasing Russia's ability to control Armenian decisionmaking. According to the website Civil.GE, on July 6 the Georgian parliament endorsed a draft law to privatize state assets, including the North-South Pipeline. This pipeline delivers Russian natural gas to Armenia.

Georgian Prime Minister Nika Gilauri promised that if Georgia sold shares of the pipeline, that the government would keep controlling interest. The opposition tried to hold the prime minister to his word by offering an amendment that would limit the sale of pipeline shares to 49 percent. Had the amendment passed, it would have been impossible for the government to sell control of the pipeline to any outside investors. Parliament rejected the amendment, leaving open the possibility that either GAZPROM or a GAZPROM affiliate could snap up the pipeline.

Parliamentarians who backed the sale insisted that the pipeline would not be sold to Russia, but GAZPROM is not officially a part of the Russian government. GAZPROM has used its control of pipelines to increase the price of natural gas to downstream countries, and has also manipulated the gas supply when these countries take actions of which the Russian government disapproves.

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