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NEWS & COMMENTARY 2008 SPEAKERS 2007 2006 2005

Friday, December 22, 2006

Russia to cut off gas to Georgia

Russian gas company Gazprom has said it will cut off gas supplies to Georgia from 1 January in an escalation of a long-standing price dispute.

Georgia has refused to accept Gazprom's demand for a doubling in its gas price to $230 per 1,000 cubic metres.

Georgia says it is being punished for its Western-leaning policies, but Gazprom says the rise will bring the rate into line with European prices.

In a similar dispute earlier this year, Gazprom cut off supplies to Ukraine.

Regional influence

The Ukrainian row, which caused a temporary disruption in gas supplies to western Europe, led to criticism that the state-controlled Russian firm was using gas exports as a political weapon.

Gazprom, which is looking to expand its influence in the region and across Europe in general, is also embroiled in a price dispute with neighbouring Belarus.

Gazprom views Georgia's position as a refusal to buy Russian gas in 2007
Sergei Kupriyanov, Gazprom

Gazprom accused the Georgian government of snubbing it in talks aimed at finding a solution to the price dispute.

"Gazprom views Georgia's position as a refusal to buy Russian gas in 2007," said company spokesman Sergei Kupriyanov.

Gazprom wants to more than double what Georgia pays for its gas, from the current price of $110.

Georgian firm Energy Invest was due to buy 360 million cubic metres of gas from Gazprom next year, up from 250 million cubic metres this year.

Relations between Georgia and Russia have been fractious since a diplomatic dispute in September, when Georgia arrested four Russians accused of spying.

The Kremlin hit back with an air, sea and postal blockade on Georgia and a crackdown on Georgian migrants in Russia.

A ban on key Georgian exports, such as wine and mineral water, has also been in place for months, with Russia citing health concerns.
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