By Helena Bedwell

Russia failed to damage Georgia’s reputation as a reliable corridor for Caspian Sea energy bound for Europe after targeting pipelines during a five-day war last August, the Georgian prime minister said.

“In last year’s war, Russia targeted Georgia as the backbone of energy transit from Asia to the West,” Nika Gilauri said in an interview in the capital Tbilisi late on July 31. “But Georgia’s image as a trustworthy partner survived and was even enhanced after the war.”

Gilauri reiterated Georgia’s claim that Russia tried to bomb pipelines during the war, including the BP Plc-operated Baku-Supsa, which carries oil from the Azeri capital Baku to Georgia’s Black Sea port of Supsa, and Baku-Tbilisi-Ceyhan, which delivers oil to Turkey’s Mediterranean port of Ceyhan. Russia has denied targeting the pipelines.

Russia routed Georgia’s U.S.-trained army in the war over the breakaway region of South Ossetia. Moscow later recognized both South Ossetia and Abkhazia, another separatist region, as sovereign countries. The defeat caused about $1 billion in damage to Georgia’s economy. Russia deployed troops in both regions and agreed to defend their borders.

Pipeline Shutdowns

The Baku-Supsa pipeline, which has a capacity of about 100,000 barrels a day, was shut on Aug. 12, 2008, because of the war and reopened on Nov. 6. The Baku-Tbilisi-Ceyhan pipeline, with a capacity of about 1 million barrels a day, shut on Aug. 5 last year after an explosion in Turkey. Tankers at Ceyhan resumed loading oil three weeks later after damage was repaired.

The Russian Foreign Ministry declined to comment immediately when contacted by Bloomberg News.

Baku-based BP spokeswoman Tamam Bayatly said by telephone that the company was “not aware of any bombings during the events of last year” and is “still not aware of any” now.

Gilauri said Russia’s aggression helped to advance European plans for energy routes that bypass Russia, including the 7.9 billion-euro ($11.3 billion) Nabucco project, which could draw on Central Asian gas routed through Georgia. An agreement on Nabucco was signed July 13.

Europe’s search for alternative energy routes was also accelerated in January after a payment dispute led to a halt of Russian gas shipments to Europe through Ukraine.

“The West, and especially the countries in the eastern part of the European Union, suffered from Russia’s gas dispute with Ukraine, and they know that diversification is a must,” Gilauri said. “Georgia is the bridge between Asia and Europe.”

Azeri Gas

Georgia plans to increase income from energy transit fees to $50 million next year from about $30 million in 2009, Gilauri said. The former Soviet republic also receives about 10 percent of its gas needs from an agreement on a pipeline that connects Russia to Armenia.

Azerbaijan has been supplying gas to Georgia since 2006, after pipeline explosions in southern Russia cut off deliveries to Georgia and neighboring Armenia. Georgia also gets around 5 percent of transit gas from the Baku-Tbilisi-Erzerum pipeline, Gilauri said.

URL: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aM63DADh2G4o