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97.03.02 - Priority Emergency Investments in Oil and Gas Infrastructures - Caucasus

Title of Project: "Priority Emergency Investments in Oil and Gas Infrastructures - Caucasus"

Reference Number: 97.03.02

Beneficiary Countries: Armenia, Georgia

Management contact details:

Contractor: Ruhrgas AG/Gaz de France/Babcok Borsig Address: Kallenbergstrasse 5 D-45141 Essen, Germany Tel: + 49 201 3205383 Fax: + 49 201 3205500 Contact person: Mr. P.Paetzold
Local Operator (Armenia): Ministry of Energy of the Republic of Armenia Address: Government House 2, Republic Square 375010, Yerevan, Republic of Armenia Tel: + 3741 151 687 / 528 704 Fax: + 3741 151 687 / 528 704 Contact person: Mr. A. Galstyan	Local Operator (Georgia): Georgian Gas International Corporation Address: 24, 300 Aragveli Str., Tbilisi 380005 Georgia Tel: + 995 3292 0248 Fax: + 995 3292 3229 Contact person: Mr. Tvalabeishvili

Total budget of project: EUR 2.5 million

Equipment supplier: Pietro Fiorentini (Italy).

Sector of activities: Natural gas sector

Start date of project: November 1999

End date of project: August 2002

Project objectives:

Objective No. 1:
To implement priority investments in oil and gas infrastructures with the aim of improving their operational efficiency, safety and environmental conditions.

Objective No. 2:
To train local firms in implementation techniques including identification, preparation, evaluation, supervision and monitoring of projects.

Project brief description of activities/approaches:

The following activities was envisaged within the project:

To identify and select priority investments that meet predefined technical, operational and economic criteria;
To set up the technical and other conditions for these investments to be implemented efficiently on a pilot basis with the support of Tacis financing and the participation of local counterparts, firms and experts;
To monitor the installation of the pilot investments optimizing all components which will enhance the standardisation of selected investments in terms of operational and environmental conditions, maintainability, safety and health conditions;
To train local firms in project identification, preparation evaluation and supervision and more generally implementation techniques, including the possibility of local assembly and manufacturing of project components establishing joint venture(s).

The project activities were performed according to the following phases:

Phase 1: Project Identification - The Contractor collected from all beneficiary countries individual project plans and proposals, evaluated and ranked the project proposals.

Phase 2: Project Selection - Once the projects were identified and ranked, the final list of the priority projects was prepared which included the following projects:

Construction of a new metering station of Gweletti (Georgia);
Construction of a new metering station of Kohgb (Armenia);
Installation of a leak detection system in Armenia.

Phase 3: Project Preparation - Relevant documentation were prepared for the projects, namely Technical Specification for the metering stations, Tender Documents, etc.

Phase 4: Project Implementation - The Supply Contract for the equipment of the metering station of Kohgb was endorsed by the EC on 23 November 2001. The preparatory works for the metering stations of Gweletti and Kohgb were completed on 10 December 2001. The training on the operation of the metering stations was provided to the Georgian and Armenian experts.

Intended results/encountered limitations:

Objective 1:
The output of two fully functional metering stations Koghb and Gweletti, used by the beneficiary countries (Armenia and Georgia), to monitor incoming gas quantity and quality from neighboring countries. This shall augment the transparency of the inflows of gas between the surrounding states. The output of fully equipped vehicles, capable of immediate intervention when and where required on the gas line network in the beneficiary countries. This shall increase the safety and optimization of transportation of the existing gas network.

Objective 2:
To train local firms in project identification, preparation evaluation and supervision and more generally implementation techniques, including the possibility of local assembly and manufacturing of project components establishing joint venture(s).

Conclusions and summaries:

This priority investments project is a respond to one of the INOGATE Programme's main objectives: to support the efforts of INOGATE Participating Countries in rehabilitating, rationalising and modernising regional oil, gas and oil products transmission networks in view of assuring the transparent, safe and secure transport of hydrocarbons from producers countries to Europe.

Note: During the Regional INOGATE Working Group Meeting for the Caucasus Region, held in Brussels on 8-9 October 2001, it was decided that the Contractor of the new INOGATE Project 98/99.02 "Financing small-scale investments for Regional Oil and Gas Infrastructure in Caucasus", RENCO SpA (Italy), will have to provide equipment for the metering station of Gweletti and supervise the pre-commissioning, commissioning and start-up of both metering station

Objective 2:
The training on the operation of the metering stations was provided to the Georgian and Armenian experts in December 2001 at the shops of the Supplier (Italy).