Russia's move on energy
chessboard By Sergei Blagov
MOSCOW - Russia has moved to prop up some
Central Asian regimes and boost its clout in the
strategically important region. However, the
Kremlin's new efforts followed moves by some
Central Asian nations to diversify their energy
policies and escape from over-reliance on Russia.
The Kremlin has backed the Uzbek
leadership's efforts to avoid destabilization or a
"colored" revolution. "We do not need a second
Afghanistan in Central Asia and we will act very carefully
there," Russian President
Vladimir Putin said Tuesday, referring to
Uzbekistan. "We do not need a revolution in
Central Asia."
In an apparent bid to avoid
a regime change, Uzbekistan opted to join a
Russia-dominated grouping, the Eurasian Economic
Community. The EEC member states - Russia,
Belarus, Kazakhstan, Kyrgyzstan and Tajikistan -
agreed to admit Uzbekistan into the organization
on January 25 at a summit meeting in St
Petersburg, citing both economic and security
reasons.
Uzbek President Islam Karimov
conceded that his country joined the EEC in the
face of security challenges. He also made little
secret of where he expected security assistance to
come from: "Uzbekistan sees its future in close
cooperation with its neighbors, primarily Russia."
At the EEC summit, Russia also indicated
plans to forge closer ties with Uzbekistan in
nuclear energy. Known to have extensive
uranium-ore reserves, Uzbekistan could give Russia
"additional long-term opportunities" in nuclear
energy, Putin said at the summit.
Meanwhile, Moscow lost little time
claiming some economic benefits from closer ties
with Uzbekistan, and the gas monopoly Gazprom has
become a main engine of the Russian energy policy
in the region. Gazprom chief Alexey Miller
traveled to the Uzbek capital on January 20 and
agreed to increase the price for Uzbek gas by
nearly a quarter, up to US$60 per 1,000 cubic
meters.
Uzbekistan is the third-largest
former Soviet gas producer after Russia and
Turkmenistan; it currently produces 56 billion
cubic meters (bcm) of natural gas a year. In
December 2002, Gazprom and Uzbekneftegaz signed a
strategic partnership agreement, and Russia
pledged to purchase up to 10 bcm of Uzbek gas each
year until 2012. Gazprom has also pledged to
invest up to $1.5 billion in the Uzbek gas sector.
Last year, Gazprom purchased 8.15 bcm of Uzbek
natural gas, up from some 7 bcm in 2004. This
year, Uzbek gas supplies to Russia are expected to
reach 9 bcm.
On the sidelines of the St
Petersburg summit on January 25, Russia and
Uzbekistan signed a number of agreements to
develop oil and natural-gas deposits in the
Central Asian republic. Gazprom and Uzbek
officials pledged to sign major production-sharing
agreements, tentatively in the second half of this
year.
Miller and Abdusal Azizov, head of
Uzbekistan's state-owned oil and gas company
Uzbekneftegaz, also signed an agreement on joint
exploration projects in Uzbekistan.
Speaking at a news conference after the
summit, Karimov said Gazprom had been allowed to
explore some 34,000 square kilometers rich in
hydrocarbon resources. Gazprom planned to invest
$260 million in exploration, while investments in
the project would eventually total $1.5 billion,
he said. And now Gazprom appears to be eyeing
monopoly status in Uzbekistan. "Gas to be produced
in Uzbekistan will be exported by Gazprom only,"
Miller said.
Also in January, Russia
reiterated pledges to boost energy cooperation
with Turkmenistan. "I strongly support your
suggestion to broaden our interaction in energy
production and transportation," Putin told his
counterpart Saparmurat Niyazov at a meeting in the
Kremlin on January 24. In response, Niyazov
pledged to cooperate with Russia in gas-transit
projects to funnel natural gas both to Europe and
eastward. He also backed what he described as
"Russian efforts to stabilize regional and
European gas supplies".
In April 2003,
Russia and Turkmenistan signed a major 25-year
deal on gas supplies to Russia. Niyazov pledged to
supply up to 100 bcm of gas per year to Russia
from 2010 onward, or a total of 2 trillion cubic
meters in 25 years. But in December 2004,
Turkmenistan halted gas supplies to Russia and
demanded $60 per thousand cubic meters (tcm), but
Russia's Gazprom rejected the price increase.
In October 2005, Turkmenistan requested
that the price be increased from $44/tcm to $50 in
2006 and up to $60 later on. However, on December
30, Gazprom agreed to buy 30 bcm from Turkmenistan
at $65/tcm this year, including 15 bcm in the
first quarter. Turkmenistan reportedly plans to
raise the price for its gas deliveries to Gazprom
to $85/tcm from the $65 level agreed to for the
first half of this year.
Niyazov's mention
of gas-transit projects "eastward" came in wake of
Turkmenistan's moves to expand alternative-energy
partnerships, notably with China. On January 18,
Niyazov met with visiting Chinese officials. They
reportedly discussed a draft of bilateral
agreement on Turkmen gas supplies to China, which
is expected to be formally signed during Niyazov's
visit to Beijing this spring. Chinese officials
reportedly expressed interest in projects in
Turkmenistan, notably upgrading the Seidin
refinery.
Gazprom has also moved to boost
ties with Kyrgyzstan, which is believed to have
untapped oil and gas reserves. The Russian gas
giant has promised sizable investments to help
Kyrgyzstan explore its oil and gas reserves.
On January 27, Kyrgyz Prime Minister Felix
Kulov and Miller signed a memorandum of intent to
create an oil-and-gas joint venture in the first
quarter of this year. After talks with Kulov in
the Kyrgyz capital Bishkek, Miller told
journalists that Gazprom would invest "hundreds of
millions of dollars" to explore and develop oil
and gas reserves and modernize production
facilities in Kyrgyzstan.
Meanwhile,
Gazprom also appears to face difficult
negotiations with other partners in Central Asia.
For instance, Kazakhstan's state-owned
gas-transport company, Kazmunaigaz, announced on
January 19 it was raising its price for funneling
natural gas for Russia from Central Asia.
Kazakhstan raised the fee for transporting natural
gas for Russia twice in 2005, with the price
currently standing at $1.1/tcm per hundred
kilometers.
Moscow has long eyed
Kazakhstan as its top energy partner in Central
Asia and has backed the regime of President
Nursultan Nazarbayev there. But now Kazakhstan
appears to be seeking ways to diversify its energy
ties and partnerships, thus avoiding over-reliance
on Russia. Notably, in December Nazarbayev
formally inaugurated the 1,000-kilometer-long
Atasu-Alashankou oil pipeline to funnel crude to
China. In a message to his Chinese counterpart Hu
Jintao, Nazarbayev described the pipeline as a
manifestation of bilateral "strategic
partnership".
The Atasu-Alashankou
pipeline has been seen as yet another move by
Kazakhstan's toward independence from Russia,
though Kazakhstan and China both reportedly
planned to funnel Siberian oil through the
pipeline. The $800 million Atasu-Alashankou
pipeline is expected to pump 10 million tons per
year, but it could need Russian crude from Western
Siberian via the Omsk-Pavlodar-Shymkent pipeline
to reach its full capacity of 20 million tons by
2010.
Subsequently, Gazprom's pursuit of
gas-monopoly status in Uzbekistan and closer ties
with other Central Asian countries followed signs
that some nations would prefer energy independence
from Russia. Yet it remains a matter of debate
whether any kind of gas-monopoly status could
prove attainable for Gazprom given the competition
for Central Asian hydrocarbon riches.
Sergei Blagov covers Russia and
post-Soviet states, with special attention to
Asia-related issues. He has contributed to Asia
Times Online since 1996. Between 1983 and 1997, he
was based in Southeast Asia. In 2001 and 2002,
Nova Science Publishers, New York, published two
of his books on Vietnamese history.
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