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    Uzbekistan Money Central Asia

    GCC-Central Asia partnership on energy: how ambitious can we be?

    GCC-Central Asia partnership on energy: how ambitious can we be?

    The Joint Ministerial Meeting between the Gulf Cooperation Council (GCC) and the 5 Central Asian states was held in Tashkent, on April 15. The second version of this strategic dialogue event audibly depicted the wide variety of sectors that the two regions can collaborate on. The joint statement that was issued showed that both parties, during the meeting, emphasized on cooperation in sectors such as transport and connectivity routes, security and combatting terrorism, healthcare, but also energy.

    The topic of energy does not come as a surprise, given the vast oil & gas resources both regions are home to. Nevertheless, this meeting can be considered as a potential game changer, since it incorporates the topic of energy within the principles of sustainability and circular economy. This aligns very well with the latest commitments by virtually all GCC states (except Qatar), who pledged for climate neutrality by 2060. It also aligns with the shift in investments from companies such as ACWA Power and Masdar, which initiated their wind and solar park investments and set the ground for green hydrogen production in Central Asia. Combined with the current energy conundrums that many Central Asian states face, such as power outages, due to an unreliable grid and outdated infrastructure, the timing seems ideal for both regions to expand their collaboration to new heights. However, key questions arise on how this partnership can unfold and what its limits would be.

    Room for Cooperation

    There are several fields with high potential for a GCC-Central Asia cooperation. The first one is for GCC states to expand their investment portfolio on green projects in the region. Over the last year, Saudi Arabia and the UAE commissioned in total more than 4,5GW of solar power in their premises, which, together with the investments in Uzbekistan and Kazakhstan, audibly depicts their appetite to become part of the energy transition. Central Asia, however, similarly to the Arab Peninsula, has a vast amount of land, one of the highest solar irradiation levels, high wind speeds and energy density in its western flank, which make it an excellent candidate for further investments in that sector. While the Rogun dam is the flagship project of the region, the constantly lowering levels of water are a clear indicator that GCC states should direct their investments towards solar and wind. The development of new capacities can come hand in hand with investments in infrastructure, so that the regional grid can be strengthened. On a cross-regional level, it will also be less challenging to discuss tariff structure and legal issues that usually emerge on a Central Asian level.

    Another sector where GCC states can provide considerable added value is greening of the fossil fuel sector and the heavy industry in Central Asia. A recent report from the Global Energy Monitor (GEM) depicted that Central Asian states have more than doubled the amount of additional electricity generated from coal, from 3.9GW in 2013 to 8.1GW in 2023, whereas more than 60% of the coal power plant fleet is outdated. Furthermore, Kazakhstan is in the 5th position in terms of plans to develop coal power plants, with plans to add 6GW of capacity, trailing only China, India and Bangladesh. At the same time, Kazakhstan and Turkmenistan, the region's biggest methane producers, followed the Global Methane Pledge as part of COP28 in Dubai. This is an inherently challenging task, considering that the oil and gas fields in both countries still follow outdated practices such as gas flaring during the extraction process. Both countries have occasionally made claims that the reason for this issue is the lack of investment towards modernizing their gas fields and a similar issue has been raised about the modernization of the coal power plant fleet. Carbon Capture, Utilization and Storage (CCUS) is a technology that can minimize CO2 emissions and provide the heavy industry with a feedstock that can be utilized in a wide range of sectors, such as the iron, steel, cement, food and beverages or even the petrochemical industry. GCC states have recognized this and over the past two years new policies and plans have been set by them. Saudi Arabia has introduced a mandate for all gas power plants to have CCUS infrastructure and has invested in the Jubail hub that will capture 44Mt of CO2/year in 2035. Correspondingly, the UAE set a goal of 10Mt of CO2 per year for carbon capture, whereas Bahrain and Kuwait have included investment in CCUS as part of their net-zero strategy. GCC states are investing in these technologies and they can expand their investment scope to develop CCUS infrastructure in industrial parks of Kazakhstan or in the newly-built gas power plants of Turkmenistan.

    Challenges-Limitations

    Nonetheless, there are always limitations within an energy partnership framework. The ideal scenario for Central Asian states would be that this partnership could materialize into a transport corridor, so that they can take advantage of both the port routes for LNG exports and of electricity exports, once Central Asia has achieved full energy security. An example could be the expansion of the Al-Zour LNG terminal in Kuwait, so that it can facilitate exports as well. The main challenge here is the existing transport routes, which either have to pass through Iran or through Pakistan. The former option currently has severe geopolitical impediments, while the latter has high costs and also adds the need to include Afghanistan in the equation.

    Conclusion

    In sum, the GCC-Central Asia ministerial summit confirmed the increasing momentum in the cross-regional relations and showed that there is ample room for more joint projects. Given their common geological and energy profiles, the energy sector can be a sector where the relations of the two regions can flourish. Investments in CCUS and renewable energy technologies can modernize the Central Asian infrastructure and have environmental, economic and social benefits. A connectivity project for the landlocked region of Central Asia would be the cherry on top of a beneficious partnership, however, regional geopolitical challenges pose as a limitation. Kuwait’s presidency in the GCC might be a beacon of hope, as the Gulf state has had, over the past year, constructive dialogues with Iran (prior to the conflict with Israel), but also investments made in Pakistan, which give hope for its role as a potential mediator and facilitator in the future.

    Written by: Dimitris Symeonidis

    Dimitris Symeonidis is an expert in energy geoeconomics and geopolitics, focusing on Central Asia. He founded the Decentralized Solutions Global Network (DSGN) to advance decentralized energy and agrifood systems. He also leads Greece's first green hydrogen project in Crete, advises on deep tech at URANO Kapital, and serves as a policy lead at YES-Europe. Dimitris is recognized as an EU Climate Pact Ambassador and an EU Young Energy Ambassador, and he contributes as an OSCE expert on Central Asian issues.

    22.04.2024, 18:58   Comments (0)   2059
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