The wider objective of the Tacis INOGATE Programme is to promote the regional integration of the oil and gas system and to facilitate oil and gas transport both within the region and towards the export markets of Europe.

The countries which are involved in the INOGATE 96.04 project i.e. Armenia, Azerbaijan and Georgia have been facing very serious problems since the break up of the Soviet Union.

At the time of former Soviet Union the gas transmission infrastructures of Armenia, Azerbaijan and Georgia were operated in an integrated way, being part of a centralised gas system. The gas supplied came mainly from Central Asia and was delivered to Azerbaijan and transited through the Azeri gas transmission system to Armenia and Georgia.

Now the supply of Central Asian gas to the Caucasus region was cut and Georgia and Armenia are supplied with Russian gas and the Caucasian gas network is splitted between the three nations, each managed by a independent local operating company.

The relationships between these local operating companies are either regulated by contracts (gas supply and transit contracts) as for Armenia and Georgia or interrupted as it is the case for Armenia and Azerbaijan.

From a technical point of view, coming from an integrated system without national borders, the gas transportation network, presently, is not in the best position to be operated nationally due, sometimes, to the lack of facilities normally necessary where national borders exists (i.e. metering facilities).

All the countries involved in the project are (or was in the case of Azerbaijan) gas importers. Due to the economic crisis which followed the former Soviet Union break up, these countries are facing problems of not payment from the gas final users. This caused increasing financial imbalances and a lot of external gas related debts has been accrued.

The transit fees, that could be a substantial source of revenues for Georgia, are normally paid with gas in a sort of barter system.

The lack of financial resources is causing, also, difficulties to financially support the maintenance and repair works on the pipelines and associated facilities, bringing the system to a gradual deterioration.

Participating Countries

The participating countries in the INOGATE 96.04 project are three of the Newly Independant States (N.I.S.), namely Armenia, Azerbaijan and Georgia.

Project Objectives

The goal of the above project is to audit the state of the existing gas infrastructures of Caucasus and, after a careful assessment of data and information collected, provide an investment programme aimed at a modernisation and/or rehabilitation of the audited network in order to meet the future gas requirements.

The objectives of the project can be summarised as follows :

Long/medium term objectives

• Promote the regional integration of gas primary transmission systems of Armenia, Azerbaijan and Georgia;

• Optimise gas transport through rehabilitation, modernisation and expansion of gas transmission facilities financed by foreign investors ;

• Facilitate the process of mobilising the financial resources necessary for the interventions of the gas transportation systems.

• Rank the interventions to be performed according to a series of criteria and quantify the investments in order to facilitate the fund raising process.

Short term objectives

• Select and audit the gas transmission infrastructure ;

• Assess the value of the gas transport system to a gas pipeline system operator ;

• Identify the measures to be taken and the investments to be realised to ensure that the audited infrastructure will be able to operate safely and within acceptable environmental and economic conditions.

Method of Working

The above mentionned objectives shall be reached through the performance of the 3 following phases and activities :

Phase 1 : Assess the Current Situation and short term Evolution

This first phase includes the following activities:

• review available previous and current rehabilitation studies,

• selection of the facilities to be audited,

• physical audit of transmission and associated facilities,

• assessment of operations and maintenance procedures and practices,

• hydraulic modelling of these facilities, including training of operating personnel in order to:

• assess nominal capacity and

• assess current and short term transport capacity taking into account the result of the physical audit of the facilities

• identification of additions and modifications (metering stations and dispatching centres) required to improve the efficiency of the transportation infrastructures

Phase 2 : Diagnostic of Technical and Other issues Affecting the Audited Transmission System and Analysis of Possible Remedial Mesures

This second phase shall incude the following activities:

• diagnosis of condition of facilities distinguishing :

• operational problem

• problem resulting from the need of additional facilities

• problem resulting from the state of repair of facilities

• drawing up a list of facilities renovation and modernisation work required

• assessment of Quality Control

• evaluation of an average gas transmission cost :

• CAPEX evaluation

• OPEX evaluation

• evaluation of an average gas transmission costs on the basis of the transmission capacities

Phase 3 : Preparation of an Investment Program

This third and last phase shall incude the presentation of an Investment Programme to be supported by international financial institutions and other investors.

Planned Outputs:

The expected results and output of the project 96.04 for the local gas operating company of each country involved are the following :

1. Drawing up of an investment programme for rehabilitation, modernisation and expansion of the audited gas transmission network ;
   
2. Preparation of a basic engineering study for metering stations ;
   
3. Preparation of a basic engineering study for dispatching centres ;
   
4. Preparation of a pre-feasibility study for intelligent pig inspections on selected pipeline sections;
   
5. Provision of a network simulation software for calculation of the following parameters:

• input/output pressures
  
• starting flows
  
• flows at sampling points
  
• flows at border crossings
  
• fuel gas consumption

6. Provision of a computer drafting tool (CAD) for basic design of gas transmission facilities and schematic diagrams of the above facilities ;
   
7. Training of the local personnel on the following :

• use of the computer drafting tool
  
• use of hydraulic simulation tool
  
• cathodic protection, wrapping and corrosion fault finding
  
• pigging
  
• modern operating ;

8. Provision of a personal computer, software packages, printer.