Uzbekistan is reducing oil imports from Kazakhstan in favor of cheaper Russian oil, Kazakh expert, Oleg Chervinsky wrote.
According to Chervinsky, Uzbek companies imported 15.2 thousand tons of crude oil from Kazakhstan by rail for processing in the first quarter of 2024. Last year the figure was 25.6 thousand tons. The main volume of raw materials this year was supplied to the Fergana Oil Refinery.
"At the same time, the Russian Gazprom Neft shipped via pipeline in transit through the territory of Kazakhstan in the first quarter of this year. 75 thousand tons of oil. This is almost 7 times more than a year earlier - then the figure was 10.7 thousand tons. In total, by the end of 2024, Russia plans to supply up to 550 thousand tons of oil to Uzbekistan, compared to 154.3 thousand tons a year earlier. The reason for the increase in supplies is a more attractive price. If, according to Argus, oil from Kazakhstan is supplied to Uzbekistan at a discount of $8-9 per barrel relative to the North Sea dated oil, then the discount on Russian oil reaches $11-12 per barrel," the expert said.
Uzbekistan's Energy Shortage:
Despite being rich in energy resources Uzbekistan experienced an energy shortage in the winter of 2022-2023 leaving many without gas, electricity or heating during its coldest weather. The Uzbek government acknowledged the severe energy crisis, marked by low gas pressure, power cuts, and fuel shortages, attributing the issues to a range of factors including insufficient supply, infrastructure failures, extreme cold impacting production, import halts, and broader political and economic challenges.
Grappling with increasing domestic gas demand, the country has inked a significant agreement with Russia to alleviate its energy crisis. On June 19, the two nations formalized a deal for the supply of 2.8bn cubic meters of Russian natural gas to Uzbekistan through the Central Asia-Center (CAC) pipeline, starting October 2023. This strategic move, set to transport an estimated daily volume of 9 million cubic meters, aims to substantially mitigate the gas insufficiency that Uzbekistan has been facing. Analysts have indicated that purchasing up to 6bn cubic meters from Russia could completely resolve the nation's energy shortfall.
Energy Sector Privatization:
Uzbekistan is embarking on an ambitious initiative to liberalize its energy sector, hoping to attract $15bn in foreign direct investment and enhance sector capabilities. This move is part of a broader strategy aimed at opening up the economy to international markets and stimulating economic growth. The effort includes a comprehensive update of investment programs to address previous backlogs and is spearheaded by new leadership under Deputy Prime Minister Jamshid Khodjayev. Additionally, the plan involves attracting a combined $38bn in investments across various sectors, emphasizing the government's commitment to transforming its energy landscape and fostering sustainable development.
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