Risks and Benefits to Central Asia – The Diplomat

The idea of ​​a new “gas union” was mooted much later, amid an unusually severe winter in the region. Since the second half of November, many Central Asian countries have experienced unprecedented energy deficits and natural gas shortages. This coincided with early presidential elections in Kazakhstan. Therefore, during the first foreign visit of Kazakh President Kassym-Jomart Tokayev – to Russia – after the start of his second term, the idea of ​​\u200b\u200ba “tripartite gas union” was put forward at the end of November.

Press secretary of the Kazakh leader, Ruslan Zeldybey comment: “… The talks between the presidents of Kazakhstan and Russia in the Kremlin focused on the creation of a” tripartite gas union “between Russia, Kazakhstan and Uzbekistan with the aim of coordinating their actions in order to transport Russian gas through the territory of Kazakhstan and Uzbekistan. “

Over the next few days, the proposal was formulated by Kremlin spokesman Dmitry Peskov, who spoke of creating a joint energy infrastructure management company. “The proposal means the creation of a certain legal entity for cooperation between these three countries, for the development of infrastructure, and then for foreign markets,” He said Peskov.

This statement indicates Russia’s desire to expand natural gas export routes towards Central Asia and may be a partial replacement for the European export market losses.

initial reactions

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The Western press and some local experts focused on the expansionist dimension of Russia’s interests in the region. Most commentators have indicated that Russia arguably wants to increase its political grip on Central Asia and create another point of influence to increase its political presence in the region. To counter this vision, the leaders of Kazakhstan and Uzbekistan have made it clear that the two countries are not ready to join any political unions and are ready to discuss the proposal on commercial terms only.

For example, Uzbek Energy Minister Gurabek Mirzamudov said: “Signing a gas agreement with Russia does not mean an alliance or union… It will be a technical contract… We will never compromise our national interests. Even if we [agree to receive natural gas from Russia]We will proceed through commercial sales contracts. We will not allow any political conditions to be imposed in return.” He added Uzbekistan will agree to receive natural gas from Russia only at a “reasonable price”.

Kazakhstan’s Deputy Foreign Minister Almas Aidarov confirmed that they had received an offer from Russia; However, as summed up by Tengri News, he said: “It has not been formalized in any way, nor have we received any specific details or offers from the Russian side.” he pointed out That Russia made the proposal.

current social and economic risks

The winter revealed major energy supply and management problems in the Central Asian region that had accumulated for years. If in previous decades it was the regional towns and cities that routinely suffered from a lack of electricity and heating (especially in the winter months), this year the same problem has appeared in some of the region’s capitals, including Tashkent. In January 2022, the power goes out it causes “Chaos across the region for several hours, with subways stuck in tunnels and skidders on lifts, airports shut down, district heating and tap water pumps set to idle and traffic lights turned off,” It happened Due to a power outage in the power system of Uzbekistan.

This winter was much more difficult. In November 2022, a power plant collapsed in Ekibastuz, Kazakhstan, leaving the entire city without heating with an outside temperature of -30 degrees Celsius. Same month Uzbekistan to stop Its natural gas exports to China to meet domestic needs and obvious shortage. In December and January, the temperature in Tashkent dropped below -15°C and was accompanied by heavy snowfall, which led to major shortages of electricity, heating, and natural gas in the capital.

like Diplomat Katherine Putz In conclusion, “Winter in Central Asia has increasingly been marked by power outages or collapses thanks to aging infrastructure; it is a serious political and social issue in the region.”

It’s hard to disagree, and this general trend is only going to get worse in the future for several main reasons. Natural gas production in Uzbekistan has been slow back off Since the 1990s, meanwhile, demand has skyrocketed due to a growing economy and booming population. Moreover, industrial complexes and central heating systems in Uzbekistan have historically (since Soviet times) relied on natural gas as a vital source to cover electricity and heating needs. The power system across Central Asia was designed in this way, as the region was considered abundant in natural gas. During the Soviet era, energy was managed from the center, not between independent states. For most countries in Central Asia, and Uzbekistan in particular, natural gas is a strategic resource, and a shortage in supply could have serious consequences for the economy and social stability.

Existing alternatives and potential benefits of new gas imports

The renewable or “green” energy sources that Uzbekistan has invested in over the past few years are not able to cover the growing electricity deficit. the The CIA World Factbook It shows that electricity generation from solar, wind, tidal, geothermal, biomass, and waste—that is, from all “green” sources in Uzbekistan—is less than 1 percent of the country’s total electricity generation (as of 2020). There is little immediate prospect of green energy electricity production increasing enough to have a significant impact in the near future.

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Moreover, these projects require huge investments, most of which will go to foreign companies (Canada, China, United Arab Emirates) and will not be used to develop and maintain existing skills, which raises the issue of relying on the supply of solar panels, turbines or windmill rotors, whose production is not Sweetened.

Nuclear power would have been an alternative stable source of electricity generation that would not only cover domestic needs but would have great export potential. However, building a nuclear plant takes a long time — construction could take more than a decade — and comes with political risks. Moreover, this would require a stable water supply and a complete modernization of the electrical grid to allow transmission of the high voltage electricity generated from the nuclear plant. The old and outdated electrical grid system in Uzbekistan requires modernization, although it is also pointless to replace it immediately.

Putting aside traditional “dirty” energy sources (with the highest percentage of CO2 emissions) such as oil and coal, this brief analysis leaves us with the conclusion that there are no real alternatives to natural gas as Uzbekistan’s main energy source any time soon. future.

Given that the national natural gas production rate has been steadily declining, the key question should be: Who is the importing partner that can reliably make up for the deficit?

At this time, Turkmenistan is the only source of imported gas in Uzbekistan. However, relying on just one source for imports of such a vital commodity is risky. In this way, the diversification of natural gas imports is a win-win situation for Uzbekistan. Not only does Uzbekistan get an alternative source of natural gas supplies (in the event that Turkmenistan faces internal or external pressures that would jeopardize its ability to export natural gas, or sudden disruptions in gas supplies similar to those of January 2023) but it can also benefit from the price, Thus moving from a price-taker position to a price-setting position.

Uzbekistan also has important contractual obligations to export natural gas to China, and this year the Uzbek government was forced to suspend its gas exports, endangering its reputation as a stable exporter and posing a risk of exposure to a possible contractual penalty. Moreover, Uzbekistan has additional contractual obligations to supply natural gas to it Tajikistan and electricity Afghanistan.

the potential risks

The immediate reactions of both the media and government officials were directed primarily at potential questions related to threats to national security and sovereignty. Indeed, Russia can gain significant influence over the countries of Central Asia if it becomes a major supplier of energy to the region. However, there are several considerations that reduce these potential risks.

First, Russia will never become the sole supplier of energy to the region because each of the Central Asian countries mentioned in this article has large reserves of natural gas of its own: Kazakhstan, Uzbekistan, and Turkmenistan are all major natural gas producers covering most of their countries. local needs. So, even in a critical situation, there will be enough natural gas in the region to cover strategic needs – yes, that amount may not be ideally comfortable for the public (especially during winters as harsh as this) but there is enough local supply to ensure survival .

Secondly, Europe’s dependence on Russian natural gas was more than 40 percent – an inconceivable figure in the conditions of Central Asia. However, all the predictions that predicted a catastrophic collapse of the European economy without cheap Russian gas were not justified. Even such a large dependence allowed by the European Union countries can be managed in the event of a crisis. Moreover, natural gas is not the only source of power and electricity generation in the region – there are coal-fired and hydroelectric power plants covering significant electricity needs.

Third, relations between Russia and Central Asia have been long and relatively stable and are classified as a strategic partnership on both sides, with key interdependencies in many areas outside of energy. Existential issues that exist in the EU-Russia relationship, such as the war in Ukraine, do not exist in the same way in Russia-Central Asian relations. This gives hope that any new partnerships can result in stable energy contracts without potential disruptions on the horizon (Ukraine loomed large in EU-Russia relations for decades before it fully “exploded” last year).

Any foreign direct investment project in the field of energy is associated with political risks unless the country has its skills, knowledge and ability to substitute. Building a nuclear plant, or engaging in green energy projects where all components that undergo regular replacement are produced abroad, is no less dependent than allowing an alternative source of natural gas. However, Uzbekistan has a long tradition and skill in the production, use and transportation of natural gas, which may make such dependence more manageable than any of the alternatives.

recommendation

There are no major alternatives to natural gas to ensure the stable and steady development of the economy and society of Uzbekistan, especially if we are talking about the near to medium future. With domestic natural gas reserves declining, the issue of supply becomes more apparent. Flourishing domestic needs and growing deficits are not only predictable but both materially feasible and harmful, as the past two years have shown. Having an alternative source of energy supply is particularly advantageous if it will cover marginal needs (up to 15-20 percent of total domestic energy consumption) for the reasons specified above.

The main question that remains related to technical issues: What investments are needed to allow such gas to be transported from Russia to Uzbekistan? Technical experts have to determine the current status of the Central Asia Pipeline (which connects Turkmenistan to Russia via Uzbekistan and Kazakhstan), whether Uzbekistan is able to receive gas from Russia, and what other expenditures are needed to improve infrastructure. This project is technically and commercially feasible.

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