Fuelling Europe: Georgia’s Energy Dance in the Southern Gas Corridor

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In this interview, Brasidas Group (BG) spoke with distinguished energy sector specialist and director of the think tank “World Experience for Georgia” Murman Margvelashvili, about Georgia’s role in the Southern Gas Corridor, the pipeline project to bring Azerbaijani gas to southern Europe, and its impact on European energy security.

Murman Margvelashvili is a distinguished energy sector specialist with a Ph.D. in High Energy Physics from the Moscow Institute of Nuclear Research. Beginning his career as a physicist, he has made significant contributions to the energy sector in Georgia and internationally, with multifaceted roles spanning infrastructure projects, energy planning, distribution operations, energy transit, hydropower development, market reforms, and strategic energy initiatives. As a trusted international consultant, he has provided invaluable insights to organizations like the European Commission. He holds the Country Expert (EU4Energy) position at the International Energy Agency while serving as an Associate Professor at Ilia State University. Since 2007, Dr. Margvelashvili has been the Director of Energy Studies at the think tank “World Experience for Georgia,” focusing on in-depth research and analysis of energy policy, strategy, security, and climate change.

Murman Margvelashvili

Murman Margvelashvili. Source: LinkedIn.

BG: The Southern Gas Corridor (SGC) has played a significant role in diversifying Europe’s energy supply and reducing dependence on Russia. From a Georgian perspective, how has the SGC impacted the country’s energy security and geopolitical standing in the region? How do you believe the SGC affects the Caucasus’s status in the EU considerations?

MM: SGC is the primary factor in Georgia’s relative energy security and political position due to the importance of energy flows going through the country. More than 50 percent of Georgia’s gas supply has come from the South Caucasus Pipeline by the Host Government Agreement. The mere existence of the SGC allows for receiving natural gas with reduced risk from other potentially monopolistic suppliers. The importance of SCP for Georgia can be exemplified by the fact that Russia sabotaged its supply to Georgia, trying to change its political choice in 2006, right before the SCP started operation. Now, with the Russian aggression in Ukraine, the importance of SGC has increased dramatically in the hope of bringing more gas from the Caspian to the EU. However, these aspirations must be confirmed through significant investment in Azeri production or bringing gas from Turkmenistan (potentially through the Trans-Caspian pipeline).

BG: Georgia has been a key transit country for energy resources in the region. Can you elaborate on Georgia’s challenges and opportunities in its role within the SGC and its broader energy security efforts?

MM: Georgia has played a relatively passive role in SGC’s operations and energy contribution. However, with its dedicated efforts for the promotion of the project and by providing the transit corridor, it has proven its Western aspirations and caused significant discontent in Russia. We believe that this independent pro-Western political course predominantly causes Russian aggression and the loss of our territories. SGC is a major geopolitical factor for Russia, which tries to create a constant threat and perception of instability of the flows over the SGC by controlling Georgia’s territories.

BG: Energy diversification efforts often involve navigating complex political and economic landscapes. How has the SGC and related projects managed to address geopolitical challenges and maintain stability in its operations, especially considering the Ukraine gas crisis?

MM: SGC is itself a factor of diversification. Firstly, it is an additional primary reliable source of local energy bound by international law, the interests of several countries, and the involvement of reputable global energy companies. Secondly, it brings together the interests of many countries in the stability and security of the region to deliver energy free of potential Russian political and corruption influences. Russia-Ukraine has not affected the strength of these flows. On the contrary, the interest in increased throughput has increased, as made clear by the EU-Azerbaijan MoU on doubling the natural gas supply from Azerbaijan to the EU by 2027.

South Caucasus Pipeline

South Caucasus Pipeline. Source: Wikimedia Commons.

BG: Georgia is highly energy-dependent, with many of its energy needs covered by external sources. How do you envision the future of Georgia’s energy dependence evolving, and how could this impact the country’s political, economic, social, and environmental conditions?

MM: Georgia is receiving a good portion of gas from SCP/SGC, a relatively risk-free source. Engaging deeper in the region and cross-regional energy flows can provide more low-risk opportunities for Georgia. Developing renewable wind and solar power with storage/balancing by reservoir hydropower plants is another important direction, and energy efficiency is always needed. An important factor of energy security is protection from corrupt influences, achieved by establishing transparent, competitive markets and sound regulation. Georgia needs more progress in these directions.

BG: What measures should Georgia take to enhance its energy security and reduce its dependence on external energy sources? Are there specific energy resources or technologies you believe should be prioritized to achieve this goal?

MM: Without significant fossil reserves, the obvious first choice is diversification of dependence and reliance on renewable energy sources, primarily hydropower. Diversification would mean balancing between Azerbaijan and Russia, which requires thorough consideration and creative policies. As for hydropower, unfortunately, public opposition allegedly stimulated by external hybrid influences has not allowed Georgia to develop its big reservoir HPPs successfully. This should be the primary objective.

Another major problem is Abkhazia’s stabilization of energy consumption, which consumes increasingly large amounts of electricity from Enguri HPP without any compensation. This should be possible with a well-thought-out and consistent policy, which we don’t have for now.

BG: A significant current risk is the scrutiny European oil and gas companies face to comply with net-zero targets. How can Georgia, as a participant in the SGC, promote cleaner energy sources and communicate its contributions to sustainable energy while ensuring its reputation remains intact?

MM: Georgia is a contracting party of the Energy Community working on transposing the EU legislation and policies, including those of the Green Deal, into its legal framework. Like the EU countries, Georgia has developed its integrated National Energy and Climate Plan (NECP), drafted the National Energy Policy, and is preparing for a Green Hydrogen strategy. These documents, the Low Emissions Development Strategy, Climate Action Plan, and NDC, show Georgia’s standing and actions in combatting climate change. Georgia has committed to becoming a net zero emitter by 2050 under its Low Emissions Development Strategy adopted in 2023 by the government. These processes are not necessarily related to the SGC. However, Georgia might stimulate the decarbonization of energy flows over SGC by facilitating a dialogue between countries of Central Asia, the South Caucasus, and the Eastern EU.

Georgia might stimulate the decarbonization of energy flows over SGC by facilitating a dialogue between countries of Central Asia, the South Caucasus, and the Eastern EU.

BG: Prominent representatives of the SGC have discussed the potential for using existing pipeline infrastructure for green energy transportation. Can you provide more details on plans to incorporate green technologies into SGC’s infrastructure and the benefits it envisions for Georgia and the Caucasus regarding sustainable energy development?

MM: Replacing the gas with green hydrogen is a relatively remote possibility from a technical and regulatory perspective. Blending hydrogen in energy mixes propagates hydrogen to all gas consumers in downstream countries. This will require the consent of all these countries, while technical regulatory and climate aspects are not apparent. Moreover, the efficiency of such undertaking from climate change mitigation versus other potential options is unclear. A more promising opportunity might be to produce green ammonia and export it through other means of transportation.

BG: What are the most pressing challenges and opportunities for the Caucasus in the energy sector, particularly regarding green energy initiatives and enhancing energy security? How can international cooperation further support these goals?

MM: A major opportunity for the South Caucasus lies under the broad title of cooperation for energy transition. This could involve the seasonal and daily exchanges of excess renewable energy electricity, provision of cross-border balancing services, emergency cooperation, and, very importantly, creating a wider corridor for the export of vast flows of green energy from Central Asia and eventually decarbonizing the Southern Gas Corridor (see, e.g., Central Asia Decarbonizing the Southern Gas Corridor).

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