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Energy

UPDATE 1-Georgia eyes London IPO for state gas pipeline

* Up to 15 pct up for sale

* Government will retain control

* Russia’s Gazprom was seen as possible buyer in 2005

(Adds details, background)

TBILISI, July 2 (Reuters) - Georgia plans to sell up to 15 percent of its main gas pipeline on the London stock market in two to three years, Prime Minister Nika Gilauri told Reuters.

Georgia collects transit fees on the North-South pipeline which carries gas from Russia to Armenia.

Georgia has not bought gas from Russia since 2006 when it switched to gas supplies from neighbouring Azerbaijan amid political tension with Moscow.

“We are thinking about selling 15 percent stake of North-South gas pipeline on the London Stock Exchange in two to three years’ time,” he said on Friday.

“The state will in no way give up the controlling stake,” he added.

The sale of the pipeline has been raised several times in the past.

The government explored a sale to Russia's gas monopoly Gazprom GAZP.MM in 2005 but changed its mind after a deterioration in relations with Moscow a year later.

Rehabilitation of the pipeline is a part of the U.S.-sponsored Millennium Challenge programme, and the United States has invested $35 million in the project since 2006.

Under a five-year agreement signed between Georgia and the Unites States in April 2006, the Georgian government has undertaken not to sell or transfer a controlling stake of the state-run company, which operates the pipeline.

Georgia also hosts the Baku-Tbilisi-Erzurum gas pipeline, which is used for gas supplies from Azerbaijan to Western markets via Turkey. (Reporting by Margarita Antidze; editing by David Cowell)

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