Georgia craves for oil refinery
17 February, 2011
Georgia craves for oil refinery

Georgia shall have a new oil refinery by 2015. The project cost is supposed to total about USD 1 billion and its productive capacity will be 4.5 million tons per year. However all figures are tentative at the moment and more precise data will be known after the feasibility study is completed.
As Aleksandre Khetaguri, Minister of Energy of Georgia, reported to media on February 15, 2011, Georgian Gas and Oil Corporation (GOGC) announced tender on feasibility study for the

planned new oil refinery project and OTC Company won the tender. Contract between sides will be signed by the end of February.
“Azerbaijan will provide the oil refinery with oil and that’s why we negotiate Azeri side on construction [of oil refinery] as well,” Khetaguri said adding that hopefully negotiations will be through soon. He does not rule out that GOGC will also be financing the oil refinery project however Azeri and other partners are supposed to be key investors.
Mikheil Saakashvili, President of Georgia, in his annual state of the nation address at parliament on February 11, 2011, accentuated that construction of oil refinery is a new priority to Georgia as it may solve the country,s full dependence on imported fuel. He stated that Georgia launches construction of oil refinery together with partners and the refinery will be through by 2015 and the country’s oil consumption will be based on it. 
Georgian demand for oil and oil product accounts for about million tons per year, and it is a full import. Meantime Georgia extracts some oil locally [about 50 thousand ton per year] that completely is exported abroad due to absence of the oil refinery infrastructure. And the country permanently argues over puzzling oil prices affecting inflation pressure.  
An old oil refinery operating in Batumi [the Black Sea outlet of Georgia] since soviet times is absolutely run-down. The enterprise is now owned by Kazakh national Gas and Oil Company KazMunaiGas that planned to rehabilitate the infrastructure, but stopped the rehabilitation plan due to financial crisis in 2008.
On the other hand the State Oil Company of Azerbaijan (SOCAR) having acquired Kulevi Oil Terminal project [located near Poti, Black Sea outlet of Georgia] in 2004 pledged to build a new oil refinery with 5-10 tons of annual capacity, but did not, actually due to similar financial crisis. However sector pundits say SOCAR just found construction of new refinery in Georgia unprofitable due absence of export markets.
According to Vano Mtvralashvili, head of the Union of Oilproducts, Enterprises, Importers and Customers (UOEIC), oil refinery can really solve the much spoken oil-prices problem in Georgia, but our export prospects seem suspicious as all the Black Sea neighbors of Georgia including Turkey, Romania, Bulgaria, Russia, have their own oil refineries and meet their market demand completely. 
That’s the reason SOCAR shuns oil refinery venture in Georgia while it plans to construct a new refinery in Ceyhan, Turkey, where Azeri oil directly flows through Baku-Tbilisi-Ceyhan pipeline, and which is huge market. 
To this end Georgian official statements that Azeri side is a recruited partner seem unrealistic taking into account that Azeri side made no announcements as of yet.

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