GEO

Georgia’s Oil and Gas Potential: Georgia as a Traditional Transit Country for Azeri Energy Resources

11 January, 2010

Georgia is located in a region rich with energy resources. The Caspian region ranks second in the world in terms of the amount and importance of its energy resources. Centuries ago, oil and gas shows came up to the surface of the Earth. Sometimes, they took fire naturally and the most advanced people at that time were unable to find any sound explanation to this phenomenon. This unexplained phenomenon created grounds for fire worship, a widespread religion in Iran and the South Caspian basin until the adoption of Islam in the seventh century. In addition to Azerbaijan, in the neighborhood of Georgia oil and gas have also been extracted in Chechnya and Maykop (Krasnodar Krai in the Russian Federation). Lately, in respect to energy resources, the Black Sea basin attracts special attention. Romania and Ukraine have already commenced extractions in the area, while Turkey has started exploration works. For this purpose it has invited the Brazilian company Petrobras, which has substantial experience in deep sea exploration and development works around Brazil’s offshore deep water area. According to different sources, oil and gas deposits exist in Georgia as well. Multiple oil and gas shows exist throughout the entire territory of the country. The period of greatest oil extraction occurred in the 1980s. In 2007 only 55-60 thousand tons of oil were extracted, which is a very low indicator for a country that consumes 750 thousand tons of oil products annually. Currently, three Western companies carry out exploration work on oil in Georgia: in eastern Georgia – Frontera, in central Georgia – Canargo, and in the Black Sea area – Anadarko. Large oil and gas deposits have not been discovered in the area as yet; however, according to some assumptions, substantial resources exist on Georgia’s Black Sea shelf. In Georgia, oil and gas exploration works were launched in the end of the 19th century and consist of three periods:

  • From the second part of the 19th century to 1929 (this period includes among others the New Economic Policy of the Bolshevik government);
  • The Soviet period – 1929-1990; and,
  • From Georgia’s independence to the present.