Gazprom chairman, Alexey Miller, and Uzbekistan’s Energy Minister, Jurabek Mirzamakhmudov met on May 30 to discuss the ongoing talks around the supply of Russian gas to Uzbekistan.

"Alexey Miller and Energy Minister of Uzbekistan Jurabek Mirzamakhmudov held a working meeting. The parties discussed the future course of cooperation, particularly Russian gas supplies to Uzbekistan," according to a statement of Gazprom released on May 30.

A roadmap on cooperation in the energy sector between the two nations was signed in January 2023. This signing was within a week of a similar agreement signed in Kazakhstan. The agreement detailed to start the supply of gas from Russia to Uzbekistan using the already in place Soviet-era, Central Asia-Central pipeline, however, the deadline of March 1 has come and gone, and talks are still underway. The supply of gas through this pipeline will be done through reversing the flow of the pipeline, as previously it was used to supply Russia.

Image: Map of the two main gas pipelines connecting Uzbekistan to Russia and China. (energycharter.org)

Earlier, in November 2022, Russian President Vladimir Putin proposed to establish a tripartite gas union together with Uzbekistan and Kazakhstan. But Uzbekistan stated that “if gas is purchased from Russia, it will be in the form of a sales contract, not on the basis of an alliance-style agreement.”

According to reports leaked to the media, the Russian company wanted to seize ownership of the gas transmission networks of Uzbekistan and Kazakhstan within the framework of the gas union, but both countries rejected the claims.

"The information that Uzbekistan allegedly transferred the exclusive right to all gas and oil fields to companies associated with Russia for 35 years is not true, it is misinterpreted. The main part of the developed gas and oil fields of Uzbekistan belongs to Uzbekneftegaz," Mirzamakhmudov said at a meeting with the press. "The investor gets 50% of the income, 50% goes to the state," he added.

The Uzbek official noted that the only gas field granted for the development and management for 35 years was “Mustakillikning 25 yilligi” (25 years of independence), formerly known as "Hajak", located in the Baysun district of Surkhandarya region.

What are the implications for Uzbekistan?

The import of gas supply from Russia is not new to Uzbekistan. With Uzbekistan’s rapidly growing population and rising levels of gas consumption, the country is struggling to meet domestic demands as its pushes to meet its export obligations to China. The worst of which was felt this winter with many regions being left without gas or electricity (Refer previous articles).

In accordance with a June 2010 agreement, China will receive 10bn cubic meters of natural gas from Uzbekistan annually. Some infrastructural changes were made to make the transport of gas possible with the Central Asia-China gas pipeline and Uzbekistan's gas pipeline network connected as part of the agreement.

The energy ministry also noted that there were 294 gas and oil deposits available in the country, with 118 held in the reserves of Uzbekneftegaz. At that, these reserves generate 49.6% of all gas in the country.

Image: Map showing the main gas deposit sites and jointventure processing plants in Uzbekistan (energycharter.org)

The rest of the deposits are managed by foreign and joint ventures, including Lukoil (13), Gazprom (2), Uz-Kor-Gas Chemikal (1), Surkhan Gas Chemical (1), Sanoat Energetika guruhi (105), Gazli Gas Storage (1), Natural Gas Stream (10), Epsilon (18), Uzmaloil (1), CNPC (3), Gissarneftegaz (8), Andijan Petro (3) and Petromaruz (10). 

The ministry added that the country’s internal resources or technologies will not always be sufficient to manage gas at complex deposit sites. And when making an offer to investors, the government primarily offers those sites that are difficult to master or require advanced technologies and massive resources.

The agreement with China is putting pressure on Uzbekistan to meet the agreed-upon 10bm cubic meters of gas, and Russia’s offer of supply is tempting. A further concern for Uzbekistan is its outdated technologies and processing equipment that need to be replaced to increase the efficiency of its energy sector.

Why is Russia pushing its gas exports to Central Asia?

Following the sanctions as a result of the invasion of Ukraine, Russia is facing the issue of an oversupply of gas. Previously Russia supplied 45% of Europe’s natural gas, however, following the outbreak of the Ukraine war the European Commission announced plans to reduce the EU’s reliance on Russia’s gas by two-thirds by the end of 2022 and to completely end dependence by 2030.

As you can see from the above image, the EU's dependency on Russian gas supplies has dropped significantly in 2022.

Russia underestimated Europe’s drive to move away from its gas and diversify its suppliers. Initially, the EU faced some shortages in supply, they were able to find gas from other sources, such as Qatar, Nigeria and Norway, and Algeria.

Considering Central Asia’s export deals with China, Russia has made a strategic move to deal with its oversupply. There is a demand in Central Asia that they currently cannot meet, and Russia’s reserves need to be sold. Following the recent talks between Gazprom and the Ministry of Energy of Uzbekistan, it seems that the steady flow of Russian gas to the region will begin soon. Some speculation has arisen that the final destination of this Russian gas will be China.

Given the fact that the EU, Russia, the USA, and China are all vying for influence within the region, this could be an opportunity for the Central Asian states to demand favorable circumstances within the agreements. And in the process reduce the domestic gas prices, since Russia has an oversupply the cost of import should be more than affordable. However, the Central Asian states should be wary of signing too soon to avoid being added to the list of states under sanction for cooperating with Russia. 

Tawney Kruger

Senior Editor

Daryo News