A love triangle full of calculations.

This is the first time Uzbekistan has imported natural gas from Russia. Under a two-year agreement signed with Gazprom, Uzbekistan will import 9 million cubic meters of Russian natural gas per day. This volume corresponds to approximately 2.8 billion cubic meters per year, aiming to compensate for the increasingly severe energy shortage during the winter months.

Gazprom CEO Alexei Miller presents on the implementation of the new Russia-Kazakhstan-Uzbekistan Gas Alliance project. (Source: TASS)

On October 7th, in the presence of the leaders of Russia, Kazakhstan, and Uzbekistan, Russian President Vladimir Putin officially announced the launch of a natural gas pipeline from Russia to the two Central Asian countries of Kazakhstan and Uzbekistan. Accordingly, an abundant supply of fuel from Russia will be transported to Kazakhstan, and a portion of it will be forwarded to Uzbekistan.

Rewards for those who are "not afraid of danger"

This is considered a "win-win project for all three parties," as not only is Russia eager to sell its abundant energy reserves, but its two partners, Kazakhstan and Uzbekistan, also benefit significantly, contributing to strengthening the region's energy security.

Russian gas exports fell by 21.5% in 2022 as the largest buyer, the European Union (EU), significantly reduced imports related to Russia's military campaign in Ukraine. Russia has never supplied gas to Central Asian countries. Meanwhile, Uzbekistan, despite being a resource-rich nation, is facing fuel shortages.

Thus, it appears that the “largest trilateral energy project” proposed by Russian President Putin last year has finally taken shape. Speculation about this “three-way relationship” continues, as any closer cooperation with Russia is considered dangerous in various respects.

However, above all, the authorities of Kazakhstan and Uzbekistan are concerned about simmering domestic discontent, as winter approaches, bringing with it persistent and potentially worsening gas shortages.

Previously, with their abundant resources, it seemed that Kazakhstan and Uzbekistan would not have any problems with natural gas. Kazakhstan has natural gas reserves of over 3 trillion ^cubic meters, while Uzbekistan has 1.8 trillion ^cubic meters. These countries produce over 30 billion and 50 billion ^cubic meters of gas annually, respectively.

In theory, that volume should be sufficient for both domestic consumption and export. In fact, in 2021, Uzbekistan's then-Energy Minister Alisher Sultanov declared, "the country has enough gas for three times the population of Uzbekistan."

However, this past winter, people across the country, including in the capital, suffered from a lack of heating. Drivers had to queue for hours to buy gasoline, and many gas stations had to close. Kazakhstan also faced similar problems.

In reality, these countries' gas production is insufficient to meet both export obligations and rapidly increasing domestic consumption. Kazakhstan's share of gas in its energy balance is steadily rising: 57% of the population needed gas by the end of 2021, compared to just 30% in 2013.

In Uzbekistan, natural gas accounts for over 80% of the national energy balance. Several factors contribute to the annual increase in domestic consumption of 7-10% in Uzbekistan, while in Kazakhstan, population growth is around 1.5-2% per year, and construction and industrial development are also increasing. Industrial output is projected to increase by 4% in Kazakhstan, even more so than in Uzbekistan, which saw record growth of 9.5% in 2021.

In addition to meeting domestic needs, both Central Asian countries have agreed to export natural gas to China.

However, in 2022, shortages in the domestic market led Tashkent to announce a temporary suspension of gas exports to Beijing and Astana.

Kazakhstan and Uzbekistan may have prioritized supplying goods to China to gain favor with their strategic partner and receive foreign exchange earnings, but insufficient energy for their own populations and recurring domestic energy crises posed a threat to political stability.

Early last year, gas was the main cause of protests in Kazakhstan involving over a million people. In Uzbekistan, the energy crisis this past winter triggered a series of local protests, leading to the dismissal of many high-ranking officials. For that reason, they had to seek alternative ways to resolve the issue.

The optimal solution for all three parties.

The optimal solution is to start importing natural gas from Russia and Turkmenistan, as the infrastructure for pumping gas from these countries is already in place. Like Russia, Turkmenistan is a global gas powerhouse, possessing the world's fourth-largest reserves and an annual production of over 80 billion ^cubic meters. In 2022, Kazakhstan and Uzbekistan agreed for the first time to directly import gas from Turkmenistan. However, Turkmenistan soon disappointed its new partners, as relying solely on Ashgabat would not meet the combined needs of the two countries, leading to an increasingly severe energy shortage.

Meanwhile, with its superior capabilities compared to Turkmenistan, Russia, as a partner, can both supply gas and support the construction and modernization of underground gas storage facilities, manage energy infrastructure, and address other technological aspects.

Despite some statements and sanctions against Russia related to the conflict in Ukraine, both Tashkent and Astana maintain close ties with Moscow. Meanwhile, on the other side, Russia currently has all the favorable factors to promote a successful energy project with Kazakhstan and Uzbekistan.

The Russian energy giant is quite familiar with the regional market and is more interested than ever in expanding into the relatively small Central Asian market. Since EU countries refused to buy Russian energy, Russia has a surplus of approximately 150 billion ^cubic meters of natural gas. Of course, Uzbekistan and Kazakhstan will not be able to replace the vast European market, but at least they can help Russia mitigate the blows.

Central Asian countries could even take advantage of Russia's current "outcast" status to secure a better deal. As Skoltech analyst Sergei Kapitonov believes, Kazakhstan and Uzbekistan could negotiate lower prices for Russian gas than China pays for gas from those countries. This agreement would help them offset domestic shortfalls while also earning foreign currency from exports to the Chinese market.

There are reports that Russia has begun transporting natural gas to both Central Asian countries, although few details have been released.

Closer gas cooperation with Moscow brings both risks and rewards. On the one hand, observers believe that discussing cooperation with Russia publicly at this time is very risky, but later on, regular shipments will meet the growing needs of the recipients. Regular supplies will help Uzbekistan and Kazakhstan secure economic growth, reassure the public, and fulfill existing contracts with China.

On the other hand, Russia would have even greater leverage over the Central Asian countries. This would further complicate the multifaceted foreign policies of Tashkent and Astana, and force them to indefinitely postpone the process of distancing themselves from Russian influence.

Source: https://baoquocte.vn/lien-minh-khi-dot-moi-nga-kazakhstan-uzbekistan-tinh-tay-ba-nhieu-toan-tinh-245404.html