Fri, 03 Feb 2023

Russian Gas Swap Scheme Gets Cold Shoulder in Central Asia

Voice of America
08 Dec 2022, 16:06 GMT+10

washington - A Russian scheme to facilitate natural gas sales to China and other Asian markets through a 'gas union' with Kazakhstan and Uzbekistan has met political resistance in the two Central Asian countries, at least partly because of unease over Russia's war in Ukraine.

On Wednesday, Uzbek Energy Minister Jurabek Mirzamahmudov dashed cold water on the proposal, first made public early last week, saying his nation will never risk its independence for economic benefits.

Uzbek Energy Minister Jurabek Mirzamahmudov addressed the energy crisis in his country with a video statement, Dec. 7, 2022. (Source: Uzbekistan President's Press Service) Uzbek Energy Minister Jurabek Mirzamahmudov addressed the energy crisis in his country with a video statement, Dec. 7, 2022. (Source: Uzbekistan President's Press Service)

'If we import gas from another country, we cooperate only based on a commercial contract. We will never agree to political conditions in exchange for gas,' he said in a video statement.

'Even if a gas agreement is concluded with Russia, this does not mean a union ... Uzbekistan does not border with Russia. Therefore, negotiations are conducted to deliver it through neighboring Kazakhstan. This would be a technical contract ... not a union,' Mirzamahmudov said.

The scheme was put forward by Russian President Vladimir Putin at a November 28 meeting with Kazakh President Kassym-Jomart Tokayev in Moscow.

While details of the proposed union remain vague, according to some analysts, the plan makes some economic sense for the Central Asian countries, especially Uzbekistan, which produces barely enough natural gas for its own consumption in winter and has been suffering shortages during cold spell.

As part of a gas union with Russia, a major exporter, they would be able to receive ample supplies through an existing pipeline that runs to the two countries from Russia and then sell surplus gas through another existing pipeline that runs through their territory from Turkmenistan to China.

Russia, meanwhile, would instantly acquire a new means of earning revenue from gas sales to China and possibly other Asian markets, helping it to make up for lost energy sales to Europe because of sanctions imposed in response to the war in Ukraine.

However, the scheme has encountered strong public opposition in Kazakhstan and Uzbekistan, fueled by fears the deal may come with political strings attached. Many worry that the territorial ambitions of 'the northern brother' may extend beyond Ukraine, which like them is a former member of the Moscow-led Soviet Union.

Kazakh President Kassym-Jomart Tokayev and Russian President Vladimir Putin sign bilateral documents in Moscow, Nov. 28, 2022. (Source: Kazakh President's Press Service) Kazakh President Kassym-Jomart Tokayev and Russian President Vladimir Putin sign bilateral documents in Moscow, Nov. 28, 2022. (Source: Kazakh President's Press Service)

'We have nothing to gain from the Kremlin's gas union and everything to lose,' Abdulla Abdukadirov, an Uzbek economist and former official, told VOA. 'Russia wants to boost its position here through our strategic resource.'

Kazakhstan, which shares a 7,600-kilometer border with Russia and enjoyed $21.5 billion in bilateral trade last year, sees Moscow as a strategic partner and belongs to two Putin-led blocs: the Collective Security Treaty Organization (CSTO) and the Eurasian Economic Union (EEU).

But Astana has maintained distance from Moscow during the war in Ukraine and has not recognized Russia's annexation of four partially occupied regions of that country. This has triggered criticism from Russian public figures, who remind Kazakhs that ethnic Russians comprise nearly 16% of their population.

So far, the Kazakh government has said only that it is studying the Russian proposal, while the Uzbek administration had been silent on the matter until Wednesday's remarks by Mirzamahmudov, the energy minister.

However, Uzbek President Shavkat Mirziyoyev did not receive Russian Prime Minister Mikhail Mishustin when he visited the country last week, even though Russia is Uzbekistan's second-largest business partner, with $7 billion in trade this year.

Mishustin held talks instead with his Uzbek counterpart, Abdulla Aripov, and spoke at a bilateral economic forum in Samarkand.

'Our biggest initiatives are in the energy sector,' Mishustin said, arguing that EEU membership would offer Uzbekistan 'free movement of goods, services, capital and labor.'

The Russian prime minister also pressed Tashkent 'to speed up implementation' of a 2018 agreement for the joint construction of a Russian-designed nuclear power plant, which would be completed within 10 years under the supervision of Rosatom, Russia's nuclear energy agency.

Several officials have told VOA that Uzbekistan is no longer interested in the project, though the government won't confirm this openly.

Power technicians work in remote areas of Uzbekistan as the snow comes down, Dec. 5, 2022. (Source: Uzbek Ministry of Energy) Power technicians work in remote areas of Uzbekistan as the snow comes down, Dec. 5, 2022. (Source: Uzbek Ministry of Energy)

Abdukadirov, the Uzbek economist, sees the Russian energy moves as motivated by a desire to undermine recently renewed economic and security partnerships between Kazakhstan and Uzbekistan.

'Russia clearly does not want this, since it wants to control the region and its hydrocarbons. Kazakhstan has large oil and gas resources, Uzbekistan has some,' he said. 'Russia oversees energy sales, including to China. Uzbekistan's role is limited. So, Moscow, which also exports energy, wants to ensure no competition.'

Abdukadirov argued that the natural gas swaps proposed by Putin would benefit only Moscow. 'Russia wants to sell our own gas to us and others while it directly exports its gas to China,' he said.

Iskander Akylbayev, Central Asia director at U.K.-based Oxford Policy Advisory Group, pointed out that Uzbekistan recently suspended gas exports to China through the existing pipeline because of domestic shortages, and said 'Kazakhstan plans to stop or limit gas exports next year. This certainly concerns Beijing.'

'Russia considers it logical to send some excess gas to Kazakhstan and Uzbekistan through a trilateral union with special tariffs and agreements,' he said. But he acknowledged that in the long term, both states could become more dependent on Russia.

Uzbek President Shavkat Mirziyoyev shakes hands with Kazakh President Kassym-Jomart Tokayev at the Central Asia-European Union summit in Astana, Kazakhstan, Oct. 27, 2022. (Source: Uzbekistan President's Press Service) Uzbek President Shavkat Mirziyoyev shakes hands with Kazakh President Kassym-Jomart Tokayev at the Central Asia-European Union summit in Astana, Kazakhstan, Oct. 27, 2022. (Source: Uzbekistan President's Press Service)

Paul Stronski of the Carnegie Endowment said Russia 'is eager to show it's not isolated' by striking an energy deal with the Central Asian countries, but Uzbekistan and Kazakhstan are 'wary of aligning too closely with Moscow, given its weaponization of energy and the fear of Western sanctions.'

Landlocked and struggling in the energy sector, Astana and Tashkent could use support 'but are very good at placating the Kremlin by having meetings, letting Russia pronounce what it wants, and then really watering down whatever comes of it,' he said. 'Central Asians are good about deferring to Russia symbolically but limiting the substance.'

Stronski said the Central Asian countries can 'stand up to Russia to some extent' by working together and by including gas-rich Turkmenistan. 'Working regionally gives each state political cover, enhancing leverage with both Russia and China.'

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