Geographically, Georgia is situated at the junction connecting the energy-rich Caspian region with Europe. At the same time, Georgia is part of the transport corridor between Europe and Central Asian countries, which runs along the ancient Silk Road and has a strategic importance as an alternative route to Europe for the countries in the region.
The mentioned transport corridor is not loaded today. Cargoes, other than oil, are mainly transited via Georgia from Azerbaijan and Armenia. Only an insignificant part of cargoes is shipped from the Caucasus countries to southern seaports through Iran. Even though Georgia is the closest sea gateway for almost all the Central Asian countries, they use this route on a very low scale. Instead, Central Asian countries use seaports of Iran, Russia and Baltic states although the distance to these ports are much longer than to the ones in Georgia. Moreover, these countries frequently use Russian railways and other southbound routes for cargoes to European and CIS countries.
Azerbaijan prefers the Georgian route for its oil transportation. The Western Export Route (WREP) oil pipeline from Baku to Supsa was commissioned in 1999. In 2005 the Baku-Tbilisi- Ceyhan (BTC) oil pipeline began operating. Some oil is also carried by the Baku-Novorosiysk pipeline, which is less advantageous in terms of its price and higher probability of oil mix. The Georgian railway is also used for transporting oil.
The main reason that makes TRACECA route unpopular among Central Asian countries for non-oil cargo shipments is the high price of the service on the Caspian Sea, many border-crossing barriers, and illegal payments in en-route countries.
Along with the modernization of the country's infrastructure and settlement of administrative problems, cargo turnover in the transport corridor is expected to increase in the future. It is anticipated that machinery and equipment needed for oil extraction will be transported to Azerbaijan and Central Asian countries, as well as consumer goods in containers to oil-producing countries, and machinery and equipment for small and medium size enterprises to Azerbaijan, Armenia and Central Asia.
Oil and gas transportation has increased significantly as a result of the commissioning of the BTC oil pipeline in 2005 and the South Caucasus (SCP) gas pipeline in 2006, which runs from Baku to Erzurum.
It should be noted that the railway linking Russia with Georgia does not operate today because of the Abkhaz conflict. However a new railway serving Georgia, Turkey and Azerbaijan is due to be completed by 2010.
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