Elvira Kadyrova
The gas landscape in Central Asia is complex and constantly evolving. The current situation relies on exports-imports of natural gas at least from three of the five countries in the region.
What does the current gas landscape look like in this part of Eurasia and what agreements will determine gas relations in the future today?
Uzbekistan plans to invest US $500 million in modernizing its main gas pipeline system to increase natural gas imports from Russia over the next six years (2024-2030). The first stage in 2024 will see an investment of $13.7 million, with $10.5 million coming from Uzbek gas company Uztransgaz and $3.2 million from foreign direct investments.
This modernization aims to increase Uzbekistan’s daily natural gas imports from Russia, from the current 9 million cubic meters to 32 million cubic meters.
Consequently, annual gas imports from Russia are expected to rise from 2.8 billion cubic meters to 11.68 billion cubic meters.
Kazakhstan may become a transit country for Russian gas to China. Perhaps the plans are still far from materializing, but the legal basis and agreements at the highest level are already in place. On 21 February, in Tatarstan, President Kassym-Jomart Tokayev said at a meeting with President Putin: “We held talks in St Petersburg about the construction of a gas pipeline across Kazakhstan to China. There were several issues that needed extra attention. Eventually, we arrived at solutions which I think are very positive for our side and, I think, for the Russian side, too.”
According to Tokayev, “some details have yet to be discussed,” but “the main line has been identified.”
The aforementioned negotiations in St. Petersburg last November led to the signing of an agreement on strategic cooperation. This 15-year deal encompasses various aspects of the natural gas sector, including supply, transportation and processing, exploration and production.
Turkmenistan has fully fulfilled its contractual obligations to supply natural gas to Russia. Under the five-year contract, which was concluded in April 2019, according to our estimates, Russia purchased totally about 28.7-29 billion cubic meters of gas.
Meanwhile, the World Bank predicts that in the short term, the Central Asian countries will face a tightening imbalance in gas supply and demand and difficult choices in a number of areas. A gas union with Russia can save the situation, but Turkmen gas is more promising.
“Central Asia has been a large net exporter of gas, notably to China. Rapidly growing demand within the entire subregion, combined with stagnating production (especially in Kazakhstan and Uzbekistan), limit the ability to meet export commitments to China and peak winter demand at home simultaneously,” the report says.
Russia’s proposed gas union with Kazakhstan and Uzbekistan could improve Central Asia’s natural gas balance. However, there are uncertainties related to the aging pipeline infrastructure and the reliability of Russian gas supplies.
According to World Bank, improving regional gas trade in Central Asia and increasing gas imports from Turkmenistan could be also used to replace coal in Kazakhstan, fill the emerging supply gap in Uzbekistan, and meet growing demand across Central Asia.
In addition, the study predicts a reduction in gas production in Russia, which may limit the redirection of gas flows from the EU to Asia in near term. Russian domestic production in 2025 could be 150–160 billion cubic meters lower than it was in 2021 and 200 billion cubic meters lower than earlier projections for 2025. ///nCa, 24 February 2024