Russia’s importance for energy imports remains high

Strong rise in energy imports from Russia since 2021

Oil products and natural gas account for over three quarters of Georgia’s total energy consumption, while domestic production is negligible. Consequently, the country is highly dependent on imports. At the same time, energy demand has risen by more than a third over the last ten years, reflecting economic growth and rising living standards. The combination of import dependency and rising energy demand makes changes in the supply structure particularly relevant for the Georgian economy.

Since the start of the war in Ukraine, Russia’s role in Georgia’s energy imports has increased significantly. In 2024, imports of oil products and natural gas from Russia amounted to USD 665 m, almost five times as much as in 2021 (USD 135 m). To a certain extent, this increase can be explained by the global rise in prices and increased energy demand. However, a more significant aspect is that Russia’s share as a supplier has more than doubled (39% compared to 18%). This rapid increase illustrates how strongly the import structure in the energy sector has changed within just a few years.

Oil products: major shift in import structure

The war in Ukraine has affected both prices and (as a result) the share of individual countries in imports of oil products.

Although oil prices rose worldwide as a result of the war, the price discount for Russian Urals oil increased significantly compared to other types, so that higher imports from Russia replaced other (more expensive) suppliers. In 2021, imports were well diversified, with Russia accounting for around 16% in terms of value. This share rose sharply after the start of the war, reaching almost 70% in some months of 2022/2023. However, it remained high even when prices between the oil types converged again, standing at around 40% in 2024. In 6M2025, the share was slightly higher again at 47%, but this was mainly due to higher imports of at the beginning of the year, which subsequently fell.

In this context, the development of other suppliers is also interesting: a comparison over time shows that Russian oil products have mainly replaced those from Azerbaijan and Turkmenistan. By contrast, the shares of Romania (20%) and Bulgaria (14%), which had initially declined after the start of the war, were back above the 2021 level in 6M2025.

Natural gas: imports from Russia mainly in winter

While oil products can be sourced quite flexibly on world markets, natural gas is dependent on fixed infrastructure. The government’s gasification programme has led to a steady increase in the importance of natural gas in the energy balance in recent years, as other energy sources, particularly firewood, have been replaced in rural areas.

Natural gas imports follow a clear seasonal pattern. They are low in summer, as Georgia can meet (and even exceed) its electricity demand with hydropower plants and generation by thermal power plants is therefore low. During the heating season (October to March), imports rise as natural gas is used both for heating and to partially fill the gap in electricity generation. Increased use of thermal power plants compensates for the lower electricity generation from hydropower.

Since 2007, Azerbaijan has been the main supplier, the rest being imported from Russia. The seasonal pattern is also reflected in the import structure: in summer, natural gas comes almost exclusively from Azerbaijan, while in winter it is supplemented by imports from Russia.

Russia’s importance has increased significantly in recent years. Between 2021 and 2024, its share rose steadily from 21% to 36%. Due to seasonality, the increase is even more pronounced during the heating period: in the winter of 2021/22, Russian imports accounted for 16%, compared to 46% in the winter of 2024/25.

According to the government, the increase in gas imports from Russia is mainly due to technical limitations of the South Caucasus Pipeline (SCP), which currently makes it difficult to transport larger quantities of gas from Azerbaijan.

Outlook

At USD 519 m for oil products and USD 146 m for natural gas, energy imports from Russia in 2024 were significantly higher than before the war.

In the case of oil products, the increase is primarily a response to relative price developments. Meanwhile, the price difference is no longer as pronounced as it was in 2022/23. Therefore, the development so far this year has been mixed: while Russia’s overall share was even higher than in the previous year, it declined over the course of the year (Aug-25: 26%). It is worth noting that European suppliers are now returning to their previous share. Georgia appears to remain in a position to diversify its sources of supply as needed, thereby limiting strategic risks.

For natural gas, Azerbaijan remains the main supplier as part of a long-term contract, reflecting the change in supply strategy following the disruptions in the mid-2000s. Therefore, the significant rise in imports from Russia is noteworthy – a development that should also be seen in the context of Russia’s intensified search for alternative sales markets since 2022. In addition to the technical aspects, the authorities point out that the expiry of parts of the contract with Azerbaijan in the coming years will require attention. A new contract has not yet been publicly confirmed. The lack of domestic gas storage facilities continues to pose certain supply risks.

High economic growth suggests that energy demand will continue to rise. Measures to reduce import dependency would therefore strengthen resilience. Plans to expand electricity generation from renewable energies are a promising step, as they could reduce the demand for thermal energy. Further measures to increase energy efficiency would complement these efforts.

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The development of exports to Russia since the war in Ukraine is examined in Newsletter No. 59.