Key Takeaway

One of the most consequential features of China’s energy strategy is that it has partially transformed a longstanding vulnerability – heavy dependence on imported oil – into strategic flexibility. It did not do this simply by buying more crude. China built large inventories, surplus refining capacity, multiple alternative energy sources and an industrial system capable of shifting demand and imports when a crisis hits.

A New York Times analysis published on September 21, 2026 reported that China cut oil purchases by 23% in the first six months of the Iran war compared with the same period a year earlier. Large oil inventories, refining capacity and alternative energy sources made that reduction possible. The article cited a Goldman Sachs estimate that by late August global crude prices were roughly $10 per barrel lower than they would have been had China continued buying at its prewar pace. The source’s broader argument is that an importer’s traditional vulnerability has become, to some extent, a source of market and geopolitical leverage.

Georgia cannot and should not copy China’s scale. China has a huge domestic market, massive refining capacity, coal production, world-leading renewable-energy manufacturing and the financial resources to hold enormous reserves. The lesson for Georgia is more practical: energy security is not simply the choice of supplier. It is a system of buffers – inventories, diversified supply, spare infrastructure, seasonal flexibility and the ability to manage demand when normal flows are disrupted.

For a small country, energy power does not mean influencing global prices. It means preventing the failure of one resource, supplier or route from turning into a national economic shock.

China’s model: build buffers around the vulnerability

China’s underlying weakness remains clear: it consumes far more oil than it produces. A country in that position should be highly vulnerable to wars, blockades and disruptions in maritime supply.

China added several layers of protection.

The first is inventory. Large stocks allow the country to buy less for a period and avoid becoming a forced buyer at the worst possible moment.

The second is refining capacity. China is not only a major oil consumer; it is one of the world’s largest refining centers. When diesel, gasoline or jet fuel becomes scarce regionally, unused or flexible refining capacity can become an economic asset.

The third is substitution. Electric vehicles, batteries, renewables, coal and a highly electrified industrial base reduce the degree to which an oil shock must translate directly into a broader economic shock.

The fourth is coordination. In a crisis, China can reduce purchases, use inventories, alter fuel exports and shift between different parts of its energy system.

The result is not energy independence. It is optionality.

Georgia’s energy picture is different, but the vulnerability logic is similar

Georgia’s most visible domestic energy advantage is hydropower. But final energy consumption extends well beyond electricity.

Geostat’s 2024 energy-consumption survey reported that natural gas accounted for 42.4% of final energy consumption, petroleum products for 29.6%, and electricity for 20.5%. The remaining share came from coal, biofuels, geothermal and solar energy. This means Georgia’s energy resilience cannot be evaluated through hydropower alone. Transport, heating and parts of industry remain heavily exposed to imported fuels and gas.

Natural gas is particularly import-dependent. GNERC’s 2024 annual report said 99.5% of Georgia’s gas demand was met through imports, with Azerbaijan supplying 74% of demand.

Georgia also relies heavily on imported petroleum products. Geostat’s 2024 energy balance recorded 77,742.7 terajoules of petroleum-product imports, compared with 2,371.9 terajoules of output from domestic petroleum refining.

Electricity is more diversified. In 2025, Georgia generated 13.84 billion kWh of electricity, including 10.99 billion kWh from hydropower and 2.77 billion kWh from thermal plants. Imports were 1.56 billion kWh and exports 0.51 billion kWh. The monthly balance also reveals strong seasonality: import needs rise during parts of winter, while hydropower strengthens during wetter months.

The key Georgian risk is not one dependency. It is the interaction of several dependencies.

Energy-security discussions often focus on a single question: how dependent is the country on one supplier?

That matters, but it is incomplete.

A gas disruption can constrain thermal generation. An electricity shortage can increase import needs. Higher global fuel prices raise transport costs. Higher transport costs then spread through the prices of almost every physical product.

Resilience must therefore be understood as a system.

China’s lesson is precisely that the protective capacity does not sit in one commodity. Oil inventories are reinforced by electrification, alternative generation, refining, coal, batteries and logistics.

For Georgia, the equivalent is not one giant project. It is a portfolio of buffers.

Lesson one: inventories are insurance, not idle capital

In normal times, energy inventories can look inefficient. They occupy storage capacity, tie up capital and require maintenance and rotation.

In a crisis, they buy time.

That time can be the most valuable commodity of all.

The Energy Community’s oil-security framework requires Contracting Parties to maintain emergency crude-oil or petroleum-product stocks equivalent to at least 90 days of net imports or 61 days of inland consumption. Its 2025 implementation report for Georgia rated oil security of supply at 10% and said legislation on mandatory minimum stocks remained in draft form, with the government empowered to determine the required amount by 2030.

This does not mean Georgia has no state or commercial fuel inventories of any kind. Georgian law provides for emergency petroleum products within state and mobilisation reserves. The distinction is that the Energy Community framework requires a permanent, transparent and quantitatively defined emergency stockholding system.

The lesson is direct: the economic value of a reserve should not be measured only when it is physically used. It also lies in preventing the country from becoming a forced buyer during a disruption.

Lesson two: gas security is not just a supplier count

Azerbaijan is Georgia’s principal gas supplier and that long-term partnership is a major strategic advantage. But resilience also requires a buffer for a temporary interruption.

The Energy Community’s 2025 Georgia report rated gas security of supply at 96%. Georgia had adopted crisis-level and security-of-supply rules and submitted a risk assessment, preventive action plan and emergency plan. The same report noted that Georgia does not have gas storage and is exempt from the European storage obligation because of its isolated position in the Energy Community gas system.

That is significant institutional progress. But crisis plans and physical buffers are different tools.

Georgia studied an underground storage project at the depleted Samgori South Dome field. The historical feasibility study envisaged 210–280 million cubic meters of active gas. That figure is a project parameter from an older study, not operating storage capacity today. If the concept is reconsidered, its economics and technical design would need to be reassessed under current conditions.

Lesson three: spare capacity is not always waste

Business logic often treats underused capacity as inefficiency. Energy security is different.

Part of China’s refining capacity may not run at maximum utilization in ordinary conditions, but in a crisis that spare option becomes strategic.

For Georgia, the same concept could apply in different forms: flexible generation, grid capacity, redundant transmission routes, storage and strong interconnections with neighboring systems.

Georgia’s 2025 power balance already demonstrates a multi-layer system – hydropower, gas-fired thermal generation, wind and imports. The key question is how quickly one layer can compensate when another weakens.

Lesson four: substitution may matter more than “independence”

The word “independence” is frequently used in energy policy. For a small open economy, complete energy independence is neither realistic nor necessarily efficient.

Flexibility is more useful.

If petroleum prices spike, how much transport can shift toward electricity? If hydrological conditions weaken, can thermal generation, wind, solar, storage and imports compensate? If one gas route is interrupted, are alternative contracts, suppliers or reserves available?

Electrification can therefore be part of energy security. Electric transport, efficient electric heating where appropriate, efficient buildings and selected industrial electrification can reduce direct exposure to imported petroleum products.

But electrification increases resilience only if the power system itself is resilient. Otherwise one dependency is simply converted into another.

Lesson five: energy security is also a price-stability policy

Inventories, reserve generation and additional infrastructure cost money. Before a crisis, they can appear expensive.

But energy shocks have much broader economic costs: higher transport costs, inflation, disrupted production, pressure on household incomes and potentially pressure on the currency and fiscal system.

The correct comparison is therefore not “How much does a reserve cost?” It is “How much does a reserve cost relative to the economic damage it can prevent?”

According to an assessment by BTU researchers, this avoided-loss framework deserves a larger role in Georgia’s energy planning. Fuel inventories, gas storage, transmission, battery storage and reserve generation should be evaluated not only by direct commercial return, but also by the cost of disruptions they can mitigate.

A realistic Georgian model

Georgia should not copy China by building large refining overcapacity for its own sake. The scale and economics do not fit.

A more realistic approach is a small-country resilience model.

The first layer is an EU-compatible emergency petroleum-stock system.

The second is a physical or regional gas-buffer solution combined with tested crisis plans.

The third is a more diversified power mix: strong hydropower complemented by wind, solar, flexible thermal generation and energy storage.

The fourth is stronger interconnection with neighboring systems and market rules that make emergency imports technically and commercially available.

The fifth is efficiency. The cheapest emergency energy is often energy that never needs to be consumed.

The sixth is pre-defined protection for critical services: hospitals, water, telecommunications, public safety, food logistics and essential transport.

What China’s example does not teach

China’s experience is not an argument for maximizing every reserve or building redundant infrastructure without regard to cost.

Stocks are expensive. Infrastructure requires maintenance. Spare capacity can become a bad investment. Some risks may be covered more efficiently through regional agreements or commercial contracts than through domestic physical assets.

Energy resilience is therefore not maximum redundancy. It is an optimal buffer.

Different resources may require different solutions: physical emergency stocks for petroleum products; domestic storage, regional storage or contractual flexibility for gas; and generation diversity, networks, storage and imports for electricity.

Those choices should be driven by data, cost and the specific disruption being insured against.

Why this matters for Georgia

Georgia cannot influence the global oil price. It cannot replicate China’s geopolitical leverage.

But small economies have one advantage: it is possible to map vulnerabilities and design targeted buffers with relatively clear institutional responsibility.

Georgia can know how many days a specific fuel disruption can be absorbed; how much electricity is missing in a dry winter; which infrastructure has a single point of failure; how fast demand can be reduced; and what alternative routes exist.

Once those questions have real answers, an energy shock becomes more than an emergency. It becomes a scenario for which the country has prepared.

Conclusion

China has not eliminated its energy weakness. It remains one of the world’s largest oil importers.

What it has done is build enough layers around that dependence to create options during a crisis.

That is the real lesson for Georgia.

Energy security is not simply owning domestic resources. It is the ability to prevent the loss of one resource, supplier or route from stopping the wider economy.

For Georgia, energy power will not mean moving global prices. It can mean something more practical: sufficient reserves, diversified supply, a flexible electricity system, backup infrastructure and enough time to respond calmly when normal flows are disrupted.

For a small country, that time and optionality may be the most realistic form of energy power.

Data and Main Sources

The New York Times International, “Oil stockpile gives China geopolitical leverage”, September 21, 2026.

National Statistics Office of Georgia, Energy Balance of Georgia 2024; Results of Energy Consumption Survey 2024.

Georgian National Energy and Water Supply Regulatory Commission, Annual Report 2024.

Electricity Market Operator, Electricity Balance 2025.

Energy Community Secretariat, Georgia Annual Implementation Report 2025; Security of Supply – Oil Stocks.

Legislative Herald of Georgia, legal framework on state material and mobilisation reserves.

Georgian Oil & Gas Corporation, Samgori South Dome Underground Gas Storage feasibility materials.

Prepared by the academic team of Business and Technology University and the BTUAI Research Team, Tbilisi, Georgia.