YEREVAN.- The Georgian government finally clarified the privatization procedure of pipeline supplying gas from Russia to Armenia.

Georgian Energy Minister Alexander Khetaguri said 25% of shares of Georgian Oil & Gas Corporation will be put up for sale on the stock exchanges of New York, London and Warsaw. The Corporation also owns a 221 km section of pipeline supplying gas from Russia to Armenia.
 
Should this decision cause Yerevan’s anxiety?  First of all, the stock market privatization is quite acceptable for Armenia. For us, it would be unacceptable if the pipeline was sold directly or through the competition, which would provide the opportunity for Azerbaijan’s SOCAR to buy it.

Under the current circumstances, all the shares are unlikely to be bought by one company even if it offers a high price. Perhaps, the Azerbaijani company will buy some of the shares, for example 1-2%, but let’s not forget that they also are interested in Russian and Kazakh companies, meanwhile other interested parties may appear in the international market.

Even ArmRosGazprom is not concealing its interest in acquiring the shares. Besides, putting up only 25% of shares for sale will hardly attract many investors.

It should be noted that the Georgian Oil & Gas Corporation - is a huge organization which brings together a number of companies, such as “Georgian International Oil Corporation”, “Georgian Gas International Corporation” (the company controls the pipelines) and National Oil Company “Georgian Oil”. The pipeline is just a small part of the assets of a huge corporation. The decision does not apply directly to the pipeline, it may be removed from the list of the assets at any time.

Besides, this section of the pipeline does not promise significant economic dividends - only a 10% income left by Russia to Georgia from natural gas supplies to Armenia.

This makes about 150-200 million cubic meters of gas which is equivalent to $ 40-45 million. Given that the gas in Georgia’s domestic market is assessed more cheaper, the real incomes of the pipeline are negligible.

This suggests that future investors should not expect high dividends from the shares of the Georgian Oil & Gas Corporation. The only advantage is political dividends that the investor will get, but this does not guarantee success of exchange distribution.

Samvel Avagyan