On 6 January 2015, after the Foreign Policy Inter-Agency Council meeting, the Minister of Foreign Affairs of Georgia, Tamar Beruchashvili, assessed the fact of the Russian company, Rosneft, entering the Georgian market. According to Ms Beruchashvili, selling 49% of the stocks of the Petrocas Energy Group to Rosneft is a very delicate issue. She also added that according to her information, Rosneft does not violate the Law of Georgia on Occupied Territories at this stage as it is not operating on the territory of Georgia. According to the Minister, the Government of Georgia is interested in this issue as the case concerns the selling of a strategic object, the Poti Port Oil Terminal.

FactCheck

took interest in Minister Beruchashvili’s statement and verified it.

At the end of 2014, Rosneft purchased 49%

of the stocks of the Petrocas Energy Group, a company owned by Davit Iakobashvili. However, Mr Iakobashvili retained controlling interest of the company. A statement issued by Rosneft says that the aforementioned deal will promote the extension and diversification of the company’s activities in the Caucasus region and enable it to play a more prominent role in the oil market of Central Asia and the South Caucasus.

The Petrocas Energy Group

is a multifunctional holding that transports petroleum products in the Caspian Sea region, Central Asia and the South Caucasus. The group carries out the selling, dispatch (east-to-west and vice versa) and storing of oil and chemical products at the Poti Port Oil Terminal. The group also owns the largest network of petrol stations in Georgia operating under the world-famous Gulf name.

According to the information

expressed in the Russian media, the Poti Port Oil Terminal and Gulf petrol stations are being passed into the possession of Rosneft. Head of Rosneft, Igor Sechin, stated that the partnership of Rosneft and the Petrocas Energy Group will play a main role in the energy security of the region.

The agreement reached between Rosneft and the Petrocas Energy Group raised the legitimate question of whether or not the Law of Georgia on Occupied Territories has been violated. The Minister of Economy and Sustainable Development of Georgia, Giorgi Kvirikashvili, stated that Georgia has not participated in the deal and the agreement has been reached at an offshore zone. However, he ordered

his Ministry to study the legalities of the deal together with the Ministry of Foreign Affairs and the Ministry of Justice.

Article 5 of the Law of Georgia on Occupied Territories

clarifies that any transaction regarding real property that is concluded within the occupied territories in violation of the legislation of Georgia shall be deemed void from the time of its conclusion and shall have no legal implications. Article 6 of the same Law restricts economic activity in the occupied territories.

In addition, Article 322 (2) of the Criminal Code of Georgia states that carrying out economic activities restricted by the Law of Georgia on Occupied Territories is punishable with a penalty or detention from three to five years. The same activity committed a) by a group, b) more than once or c) by a person previously convicted for being in violation of the article is punishable by detention from four to six years.

Not only is Rosneft represented in occupied Abkhazia’s market but it signed an Agreement on Oil and Gas Extraction with Abkhazia in 2009 that granted it the right to carry out oil extraction activities on the Abkhazian Black Sea shelf. The Abkhazian Shelf company (ООО РН-Шельф Абхазии)

was founded there in August of the same year. Rosneft’s official website includes the list of its oil stations in Abkhazia with their respective addresses. This illegal agreement granted the Russian company the right to carry out oil extraction activities on the territory of Abkhazia, in its maritime area and on the continental shelf. Moreover, it owns three petrol stations on the territory of Abkhazia, violating Articles 5 and 6 of the Law of Georgia on Occupied Territories. The Ministry of Foreign Affairs of Georgia responded to the signing of the agreement in 2009 and called it a deliberate violation of Georgian as well as international law. The Rosneft website also shows the addresses of its branches on the territory of Abkhazia.

Article 2 of the Law of Georgia on Occupied Territories defines the occupied territories and sea zones. These sea zones include the Abkhazian Continental Shelf which was made subject to the treaty between Rosneft and the separatist regime of Abkhazia and which resulted in the establishment of the Abkhazian Shelf LTD company. According to the terms and conditions of the Law of Georgia on Occupied Territories, a special regime has been established over the occupied territories. The Law also establishes a special economic regime over the occupied territories which restricts free movement, economic activity and transactions concerning real property.

Conclusion

In 2009, Rosneft signed an illegal agreement with the separatist regime of the occupied territory of Abkhazia without the permission of the Government of Georgia. Moreover, it has been carrying out oil extraction activities on the continental shelf within the sovereign borders of Georgia since 2010, violating the Law of Georgia on Maritime Space and the Law of Georgia on Occupied Territories. Additionally, Rosneft also owns three petrol stations on the territory of Abkhazia in violation of the Law of Georgia on Occupied Territories.

In the case of a violation of the Law of Georgia on Occupied Territories, the state is obliged to resort to every mechanism, provided by Georgian and international law, for protecting Georgian legal and security interests.

Rosneft has been violating the Law of Georgia on Occupied Territories since 2009. The ways of implementation of the procedures envisaged in the Law and the type of sanctions may be subject to debates and court decision but not the fact of the violation of the Law itself.

Therefore, the statement of the Minister of Foreign Affairs of Georgia, Ms Tamar Beruchashvili, that at the current stage Rosneft does not violate the Law of Georgia on Occupied Territories, is a LIE.