Uzbeks Need Level-Headed Gas Price Policy
Uzbeks Need Level-Headed Gas Price Policy
As Uzbekistan demands that its neighbours pay high prices for its natural gas, their response is to buy and use less of it, with serious effects on their economies and populations. NBCentralAsia analysts warn that this is not one-way traffic – the Uzbeks need their neighbours, too, in particular to supply them with water.
This year the Uzbeks are charging Kyrgyzstan and Tajikistan 240 US dollars per thousand cubic metres, a steep increase on last year’s price of 145 dollars. This is part of an Uzbek policy of asking all export partners, whether neighbours or not, to pay world prices. In protracted negotiations, the Tajiks and Kyrgyz failed to secure a more affordable price.
Uzbekistan produces 60 billion cu m of natural gas a year, exporting 17 billion to Russia via the Central Asia-Centre pipeline and a total of four billion to Kyrgyzstan and Tajikistan, and also to parts of Kazakstan.
Analysts say that Kyrgyzstan and Tajikistan, the poorest countries in Central Asia with few hydrocarbon resources of their own, each need to import about one billion cu m of gas annually.
However, unable to keep pace with the Uzbeks’ demands for more money, the Kyrgyz and Tajiks have simply scaled back the amount of gas they import. This year Tajikistan is planning to buy just 550 million cu m compared with 950 cu m in 2008. The Kyrgyz has also reduced their import forecast from 750 to 650 cu m.
The effects for both countries will be serious. Tajikistan’s people will suffer as the already chronic energy shortage gets worse, while industrial plants in Kyrgyzstan are already beginning to close.
NBCA commentators note that disagreements between Central States over energy issues are often used for political ends. However, it is a double-edged sword – while the Uzbeks have the upper hand on the gas issue at the moment, things may change when summer comes.
Uzbekistan is reliant on both Kyrgyzstan and Tajikistan to allow water to flow down the Syr Darya and Amu Darya rivers and irrigate its fields. As the rivers start in those countries, they have the capacity to store up the waters in large reservoirs to generate electricity at colder times of the years – especially if they are short of gas. That can starve Uzbekistan, and southern Kazakstan too, of water during the growing season.
Both the Kyrgyz and Tajiks complain that their larger neighbours do not contribute financially to the upkeep of dams and other water management systems.
This mutual interdependency means it is unwise for Uzbek leaders to behave so aggressively over gas pricing, analysts say.
“It doesn’t make sense for them to seek open confrontation with their neighbours on the gas price, ignoring the irrigation water issue,” said Komron Aliev, an economist from Tashkent, the Uzbek capital.
Other commentators recall that until 2000, the Uzbeks and Kyrgyz had an agreement on gas and water supplies, which could still be resurrected in the form of a new accord.
“Since our countries are bound together by water and energy, Tashkent could sell us gas at a cheaper rate in exchange for a water accord,” said Bazarbay Mambetov, a former deputy prime minister of Kyrgyzstan who now heads the national Association of Oil Traders. “However, Kyrgyz negotiators haven’t done well with the Uzbeks.”
Viktor Ivonin, an analyst based in Tashkent, agrees that the two countries need to talk to each other if serious confrontation is to be avoided.
“Uzbekistan needs to realise that the region is completely interconnected,” he said. “The authorities can’t just gaily bump up the price and expect their neighbours to swallow it. Our own stubbornness could rebound on us and create problems.”
(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)
This year the Uzbeks are charging Kyrgyzstan and Tajikistan 240 US dollars per thousand cubic metres, a steep increase on last year’s price of 145 dollars. This is part of an Uzbek policy of asking all export partners, whether neighbours or not, to pay world prices. In protracted negotiations, the Tajiks and Kyrgyz failed to secure a more affordable price.
Uzbekistan produces 60 billion cu m of natural gas a year, exporting 17 billion to Russia via the Central Asia-Centre pipeline and a total of four billion to Kyrgyzstan and Tajikistan, and also to parts of Kazakstan.
Analysts say that Kyrgyzstan and Tajikistan, the poorest countries in Central Asia with few hydrocarbon resources of their own, each need to import about one billion cu m of gas annually.
However, unable to keep pace with the Uzbeks’ demands for more money, the Kyrgyz and Tajiks have simply scaled back the amount of gas they import. This year Tajikistan is planning to buy just 550 million cu m compared with 950 cu m in 2008. The Kyrgyz has also reduced their import forecast from 750 to 650 cu m.
The effects for both countries will be serious. Tajikistan’s people will suffer as the already chronic energy shortage gets worse, while industrial plants in Kyrgyzstan are already beginning to close.
NBCA commentators note that disagreements between Central States over energy issues are often used for political ends. However, it is a double-edged sword – while the Uzbeks have the upper hand on the gas issue at the moment, things may change when summer comes.
Uzbekistan is reliant on both Kyrgyzstan and Tajikistan to allow water to flow down the Syr Darya and Amu Darya rivers and irrigate its fields. As the rivers start in those countries, they have the capacity to store up the waters in large reservoirs to generate electricity at colder times of the years – especially if they are short of gas. That can starve Uzbekistan, and southern Kazakstan too, of water during the growing season.
Both the Kyrgyz and Tajiks complain that their larger neighbours do not contribute financially to the upkeep of dams and other water management systems.
This mutual interdependency means it is unwise for Uzbek leaders to behave so aggressively over gas pricing, analysts say.
“It doesn’t make sense for them to seek open confrontation with their neighbours on the gas price, ignoring the irrigation water issue,” said Komron Aliev, an economist from Tashkent, the Uzbek capital.
Other commentators recall that until 2000, the Uzbeks and Kyrgyz had an agreement on gas and water supplies, which could still be resurrected in the form of a new accord.
“Since our countries are bound together by water and energy, Tashkent could sell us gas at a cheaper rate in exchange for a water accord,” said Bazarbay Mambetov, a former deputy prime minister of Kyrgyzstan who now heads the national Association of Oil Traders. “However, Kyrgyz negotiators haven’t done well with the Uzbeks.”
Viktor Ivonin, an analyst based in Tashkent, agrees that the two countries need to talk to each other if serious confrontation is to be avoided.
“Uzbekistan needs to realise that the region is completely interconnected,” he said. “The authorities can’t just gaily bump up the price and expect their neighbours to swallow it. Our own stubbornness could rebound on us and create problems.”
(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)
