The concept of a brand new “gas union” was floated at a really consequential time, amid an unusually harsh winter within the area. Since the second half of November, a number of Central Asian nations have skilled unprecedented vitality deficits and pure fuel shortages. This coincided with a snap presidential election in Kazakhstan. So, it was throughout Kazakh President Kassym-Jomart Tokayev’s first international go to — to Russia — after starting his second time period that the thought of a “trilateral gas union” was aired in late November.
As press secretary for the Kazakh chief Ruslan Zheldibay commented: “…the talks between the presidents of Kazakhstan and Russia in the Kremlin focused on the creation of a ‘trilateral gas union’ between Russia, Kazakhstan, and Uzbekistan with the purpose of coordinating their actions in order to transport Russian gas through the territories of Kazakhstan and Uzbekistan.”
Over the following few days, the proposal was elaborated upon by Kremlin spokesman Dmitri Peskov, who talked in regards to the creation of a joint firm that will handle vitality infrastructure. “The proposal implies the creation of a certain legal entity for cooperation between these three countries, and for infrastructure development, then for foreign markets,” stated Peskov.
This assertion steered Russia’s need to increase its pure fuel export routes within the route of Central Asia and maybe partially substitute for the losses of the European export market.
Initial Reactions
The Western press and a few native specialists’ preliminary response was targeted on the expansionist dimension of Russia’s pursuits within the area. Most commentators famous that Russia arguably needs to extend its political grip over Central Asia and create yet one more level of leverage to extend its political presence within the area. In order to confront this imaginative and prescient, the leaders of Kazakhstan and Uzbekistan made it clear that the 2 nations aren’t keen to affix any political unions and are prepared to debate the proposal solely on industrial phrases.
For instance, Uzbek Energy Minister Jurabek Mirzamahmudov stated: “Signing a gas agreement with Russia does not mean an alliance or union… it would be a technical contract… We will never compromise our national interests. Even if we [agree to receive natural gas from Russia], we will proceed via commercial sales contracts. We will not allow any political conditions to be imposed in return.” He added that Uzbekistan would comply with get pure fuel from Russia solely “at a reasonable price.”
Deputy Foreign Minister of Kazakhstan Almas Aidarov confirmed that they’ve acquired a proposal from Russia; nevertheless, as summarized by Tengri News he stated, “it is not formalized in any way, we have not received any details or concrete offers from the Russian side.” He famous that Russia made the proposal.
Current Socio-economic Risks
The winter revealed main issues with vitality provide and administration within the Central Asian area which have been accumulating for years. If in earlier many years it was provincial cities and cities that routinely skilled electrical energy and heating shortages (particularly within the winter months), this yr the identical drawback was evident in some capital cities of the area, together with Tashkent. In January 2022, a blackout brought about “chaos across the region for several hours, with subway trains stuck in tunnels and skiers on lifts, airports closing, district heating and tap water pumps going idle and traffic lights switching off,” which occurred on account of energy outage in Uzbekistan’s vitality system.
This winter hit a lot more durable. On November 2022, an influence plant in Ekibastuz, Kazakhstan, broke down, leaving your entire metropolis with no heating with an outdoor temperature under -30 levels Celsius. The similar month, Uzbekistan halted its pure fuel exports to China to fulfill home wants and obvious shortages. In December and January, the temperature in Tashkent went under -15 levels Celsius and was accompanied by heavy snow, which resulted in main electrical energy, heating, and pure fuel shortages within the capital metropolis.
As The Diplomat’s Catherine Putz concluded, “winters in Central Asia have increasingly featured blackouts or breakdowns thanks to aged infrastructure; it’s a serious political and social issue in the region.”
It is troublesome to disagree, and this common pattern will solely worsen sooner or later for a number of key causes. Natural fuel manufacturing in Uzbekistan has been slowly declining for the reason that Nineteen Nineties, and on the similar time, demand has quickly risen on account of a rising financial system and a booming inhabitants. Moreover, Uzbekistan’s industrial complexes and central heating techniques traditionally (for the reason that Soviet period) have relied on pure fuel as a significant supply for overlaying electrical energy and heating wants. The vitality system throughout Central Asia was designed this manner, because the area was thought of ample in pure fuel. And throughout the Soviet interval vitality was managed from the middle, not between unbiased states. For most nations in Central Asia, and for Uzbekistan specifically, pure fuel is a strategic useful resource and shortages in provide might imply catastrophic penalties for the financial system and social stability.
Existing Alternatives and Possible Benefits From New Gas Imports
The renewable or “green” vitality sources that Uzbekistan has been investing in over the previous few years are unable to cowl the rising electrical energy deficit. The CIA World Factbook outlines that electrical energy technology from photo voltaic, wind, tide and wave, geothermal, biomass and waste – i.e. from all “green energy” sources in Uzbekistan — is lower than 1 % of complete electrical energy technology within the nation (as of 2020). There are few quick prospects to extend inexperienced vitality electrical energy manufacturing sufficient to have a considerable affect within the close to future.
Furthermore, these initiatives require large funding, most of which might go to international corporations (Canada, China, UAE) and wouldn’t be used for growing and sustaining current expertise, posing the query of dependence on the provision of photo voltaic panels, generators, or windmill rotors, the manufacturing of which isn’t localized.
Nuclear vitality might have been an alternate secure supply of electrical energy technology that will not solely cowl home wants however would have a major export potential. However, development of a nuclear plant takes appreciable time – development might final for over a decade – and comes with political dangers. Moreover, it might require a secure provide of water and complete modernization of the electrical grid to permit for high-voltage transportation of generated electrical energy from the nuclear station. Uzbekistan’s outdated and aged electrical grid system requires modernization, although it is usually unfeasible to interchange it instantly.
Putting “dirty” (with highest proportion of CO2 emission) conventional vitality sources reminiscent of oil and coal apart, this transient evaluation leaves us with the conclusion that there aren’t any actual alternate options to pure fuel as the principle supply of vitality in Uzbekistan within the close to future.
Given that the nationwide pure fuel manufacturing fee has steadily declined, the important thing query needs to be: Which importing companion might reliably compensate for the deficit?
At this time, Turkmenistan is the one supply of imported fuel in Uzbekistan. However, counting on only one supply for imports of such a significant commodity is at all times dangerous. In this manner, diversification of pure fuel imports is a win-win scenario for Uzbekistan. Uzbekistan not solely will get an alternate supply of pure fuel provide (in case Turkmenistan would face inside or exterior pressures that will jeopardize its capacity to export pure fuel, or sudden disruptions in fuel provide just like the one occurred in January 2023) however might additionally leverage the value and thus transfer from value taker to cost setter place.
Uzbekistan additionally has vital contract obligations to export pure fuel to China, and this yr Uzbek authorities needed to droop its fuel exports, placing in danger its popularity as a secure exporter and posing a threat of potential contract penalty. Moreover, Uzbekistan has extra contract obligations to produce pure fuel to Tajikistan and electrical energy to Afghanistan.
Potential Risks
The quick reactions of each media and state officers had been primarily directed at potential questions related to the threats to nationwide safety and sovereignty. Indeed, Russia might obtain vital leverage over Central Asian nations if it turns into a key vitality provider to the area. However, there are a number of issues that reduce this potential threat.
First, Russia won’t ever change into the only vitality provider to the area as a result of every of the Central Asian nations talked about on this article have their very own massive pure fuel deposits: Kazakhstan, Uzbekistan, and Turkmenistan are all main pure fuel producers that cowl most of their very own home wants. Therefore, even in a crucial scenario there might be sufficient pure fuel within the area to cowl strategic wants – sure, this quantity may not be ideally snug for the general public (particularly throughout winters which can be as harsh as this one) however there’s sufficient home provide to make sure survival.
Second, Europe’s dependence on Russia’s pure fuel was over 40 % — a quantity that’s unimaginable within the situations of Central Asia. Yet, all predictions that forecasted the catastrophic collapse of Europe’s financial system with out low-cost Russian fuel didn’t come true. Even such a serious dependence that the EU nations allowed for is probably manageable in a disaster scenario. Moreover, pure fuel shouldn’t be the one supply of vitality and electrical energy technology within the area – there are coal and hydroelectric energy stations that cowl substantial electrical energy wants.
Third, Russia-Central Asia relations have been lengthy and comparatively secure and are characterised as a strategic partnership by either side, with main mutual interdependencies in lots of spheres past vitality. The existential points that exist within the EU-Russia relationship, such because the battle in Ukraine, don’t exist in the identical means in Russia-Central Asia relations. This offers hope that any new partnerships might yield secure vitality contracts with out potential disturbances on the horizon (Ukraine was a looming disaster in EU-Russia relations for many years earlier than it “exploded” totally final yr).
Any vitality FDI challenge is related to political threat until the nation has its personal expertise, information, and substitution capability. Building a nuclear plant, or participating in inexperienced vitality initiatives the place all of the parts which can be topic to common replacements are produced overseas, is not any much less of a dependence than permitting for an alternate supply of pure fuel. However, Uzbekistan has lengthy custom and expertise in pure fuel manufacturing, utilization, and transportation, which might seemingly make such dependence extra manageable than any of the alternate options.
Recommendation
There aren’t any main alternate options to pure fuel to make sure the secure and regular growth of Uzbekistan’s financial system and society, particularly if we’re speaking in regards to the close to to mid-term future. As home pure fuel reserves decline, the query of provide turns into starker. Booming home wants and elevated deficits aren’t solely projected however bodily possible and detrimental, because the previous two years have proven. Receiving an alternate supply of vitality provide is a profit particularly if this might cowl marginal wants (as much as 15-20 % from complete home vitality consumption) for the explanations recognized above.
The important query that continues to be considerations technical issues: What are the required investments to permit for such fuel switch from Russia to Uzbekistan? Technical specialists have to find out what’s the present state of the Central Asia-Center pipeline (which connects Turkmenistan to Russia by way of Uzbekistan and Kazakhstan), whether or not Uzbekistan is able to receiving fuel from Russia, and what different bills on infrastructure enchancment are essential to make this challenge technically and commercially possible.
Source web site: thediplomat.com
