Dependence on imports in Georgia’s natural gas sector: trends and prospects

Abstract

Georgia’s energy sector faces numerous challenges, and achieving energy independence requires the implementation of effective and consistent measures. According to the country’s energy balance, the share of natural gas in total energy consumption exceeds 40%. At the same time, the satisfaction of natural gas demand is almost entirely dependent on imports, as domestic production accounts for only about 1%. This dependence increases the cost of natural gas and, consequently, has a negative impact on consumer expenses.

Demand for natural gas in the residential sector has been increasing year by year, leading to a rise in import volumes. The structure of consumers includes four main groups: thermal power plants, vehicle gas refueling stations, residential consumers, and non-residential sectors. It is noteworthy that over the past decade, more than 20% of natural gas consumption has been attributed to thermal power plants, indicating the significant role of imported resources in electricity generation and ultimately negatively affecting utility tariffs.

The natural gas sector represents a natural monopoly, which requires appropriate legislative regulation. In Georgia, this function is carried out by the Georgian National Energy and Water Supply Regulatory Commission, which issues licenses for operations and sets tariffs based on regulatory audits of the costs incurred by licensed companies.

The aim of the study is to assess the current state of Georgia’s natural gas sector, identify key challenges, and develop possible solutions based on data from various sources. The paper presents the main prospects for the sector’s development as part of its conclusions.