Georgia's gas is still playing cold - Turkey to settle price / volume.

International news media are reporting that Georgia has secured the Turkish element of the Azeri gas from the Caspian Shah Deniz fields, that will soon be filling the Baku -Tbilisi -Erzurum pipeline. (This follows the Baku - Tbilisi - Ceyhan (BTC) oil pipeline for a great deal of its journey.)

It now appears that Georgian Energy Minister Nika Gilauri's plans are no slam dunk. Further talks are to be held in Baku after Georgian Prime Minister Zurab Nogaideli met with Azeri President Ilham Aliyev whi have agreed on supplies of 1 Mn cubic metres to determine the origin and price of natural gas deliveries from Azerbaijan's Shah Deniz field.(Pic Azebaijani students, thrilled at news)

Initial deliveries in September were postponed because of construction delays on a new pipeline in Turkey, the State Oil Co. of Azerbaijan said last month.

``Technical problems'' continue to hold up deliveries,said Energy Minister Gilauri's spokesman Doliashvili ``When the project goes online, we'll start getting gas from Shah Deniz.'' BP PLC, Friday said that output had been halted at the offshore field (10% owned by Russian LUKoil) because of "unspecified technical problems." Production began just under two weeks ago.

A meeting early this week in Istanbul at a trilateral meeting in which Azeri dynastic President Ilham Aliyev will take part will decide by whom the gas to Georgia is supplied, volumes and transfer prices.

It is difficult for an outside observer to see why that price will vary from the agreed Gazprom price of US$235.... although of course the announcement (if made) may confuse, obfuscate the agreed costs.

It is, after all, in all supplier's interest to maintain higher prices..... which will impact in the long(er) term on Western Europe .... and on the Norwegian Government Pension Fund.

There is a useful post at The Reliant with many detailed press links that highlights the closure on December 23, of the Russian military headquarters in Tbilisi to the Georgian government, following the completion of the withdrawal of Russian military hardware from Tbilisi on December 14 (BBC report) . Final vacation of the installation became complete with the departure of the last personnel on December 25. The closing of the installation and of its staff of 340 employees will represent the end of any formal Russian military presence in the Georgian capital - an event which has been described as a "historic moment" by Georgian deputy defense minister Levan Nikoleishvili.

Watch this space,