25 may 2017

Central Asia news

Uzbekistan aspires for leadership in the market of Central Asian gas transportation

04.05.2007 21:23 msk

RBK Daily

Business Uzbekistan

Uzbekistan intends to amplify gas transit across its territory to the amount equal to 50% of all Central Asian gas produce. Chinese rapidly growing economy is to become the principal buyer.

On April 30, President of Uzbekistan Islam Karimov received Ma Kai, Chairman of the State Committee for Development and Reforms of the People's Republic of China. A government agreement was signed. It stipulates joint construction of a gas pipeline (length 530 kilometers, annual capacity 30 billion cubic meters). This latter figure is particularly interesting. It approximately equals half of what gas Kazakhstan, Uzbekistan, and Tajikistan produce together.

The scope of all these designs is impressive, but experts say that Uzbekistan may encounter some difficulties, economic and political alike, in realization of these pretentious projects.

Uzbek and Chinese officials decline comment on the cost of the project, deadlines, or the route. Making her estimates on the basis of the proclaimed length of the future gas pipeline (530 kilometers), Anne-Louise Hugger of Economist Intelligence Unit assumes that it will run from the Ferghana Valley in the eastern part of Uzbekistan to Kyrgyzstan to China. As a matter of fact, Tashkent and Beijing made another agreement not long ago, one on joint survey and development of the Mingbulak field in the Ferghana Valley.

As far as Hugger is concerned, the proclaimed running capacity (30 billion cubic meters) is "quite pretentious". Uzbekistan sold Gazprom (its prime buyer) only 9 billion cubic meters of gas in 2006. The volume may be increased to 13 billion cubic meters this year.

RusEnergy partner Mikhail Krutikhin agrees that 30 billion cubic meters of gas sound impressive but points out that Uzbekistan intends to boost its gas production through development of fields located to the south of the Aral Sea and on the right-hand bank of the Amudarja.

Krutikhin views the Uzbekistan-China gas pipeline as a promising project but says that Turkmenistan the rival may interfere and disrupt these plans. Uzbekistan and Turkmenistan are rivals in gas export. Turkmenistan in the meantime signed a gas export accord with China in 2006. It intends to restrict gas export to China to 8 billion cubic meters at first and up it as the new fields are developed. Experts point out that the struggle for the lucrative Chinese market will be won by the Central Asian country that concentrates on development of its gas extracting industry.

China finds Central Asian gas fields particularly promising. Uzbekistan and Turkmenistan once tried to enlist the services of Gazprom in development of their gas fields but Gazprom declined the offers (for economic reasons in Uzbekistan and political in Turkmenistan). "China is being much more aggressive and astute," Krutikhin said. Leaving its own gas fields conserved for the future generations, Beijing wants the West-East gas pipeline pumping Central Asian gas for now.