Page 38 - bne IntelliNews Georgia country report October 2017

9.0 Industry & Sectors 9.1 Sector and corporate news
9.1.1 Oil & gas sector news
Georgia imports most of its gas from Azerbaijan (87%) and receives marginal amounts from Russia as a transit fee for Russian gas exports to Armenia. In 2015, Georgia's gas consumption increased by 19% y/y to 2.49bn cubic metres, prompting negotiations between Tbilisi and Russia’s Gazprom to increase Russian export volumes to Georgia.
Opposition parties have criticised the Georgian government for initiating talks with Gazprom, which is perceived as a political tool of the Kremlin. Until 2007, Georgia used to import all its gas from Russia, but diversified its imports after the 2008 Russian invasion of its territory and after neighbouring Azerbaijan launched its gas production.
American energy company Frontera Resources has made several exploration attempts in Georgia, but appear to have been fruitless thus far.
9.1.2 Transport sector news
Georgia Railway's revenue decreased by 12% y/y to $77.4mn in the first half-year on the back of lower freight volumes, the company announced in its financial results. At the same time, its operational expenses increased by 10% y/y to $71.5mn, prompting a contraction in Ebitda by 16.1% y/y to $28.4mn.
The company, one of the largest in Georgia and publicly owned, posted the results on the back of a reduction in freight transportation by 16.9% y/y to $50.6mn in H1. Freight handling and logistics also saw reductions in output by 7.8% y/y and 3.2% y/y, respectively.
Georgia and neighbouring Azerbaijan espouse hopes of becoming transportation nodes between Iran and Russia and between Europe and Central Asia and China. In order to achieve this, both Baku and Tbilisi have revamped their transportation infrastructure, refurbished old roads and built new highways and railway links.
However, freight volumes in both countries have dropped in recent years, a likely consequence of the economic slowdown in the region and calling into question their plans.
Iran is looking to boost its share of rail freight bound for Eurasia and the South Caucasus by reducing border tariffs by 50%, government-owned national rail operator, Iran Railways Co (RAI), announced on September 18, according to Iran Student News Agency.
It is clear RAI very much has Chabahar port - Iran’s only oceanic port, which connects to Indian Ocean sea lanes - in mind in making the move to lower
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