Clare Nuttall in Astana -
Tajikistan's oil and gas resources, until now assumed to be insignificant, could in fact be "super giant", as a study shows that the country may have more oil and gas than the British sector of the North Sea. Resources on this scale would have far-reaching implications for Tajikistan's economy and relations with its neighbours, though an outbreak of violence in July illustrates the difficulties of operating in the CIS' poorest country.
Tethys Petroleum announced on July 19 that it had received an independent resource report, carried out by US-based Gustavson Associates, on its Tajikistan assets, which cover an area of around 35,000 sq km. The estimated gross unrisked mean recoverable resources of those assets are 27.5bn barrels of oil equivalent (boe), the company said. London-listed Tethys is now continuing with its seismic programme in Tajikistan, with initial results expected in the last quarter of 2012. The company then plans to build its first deep well in Tajikistan.
Tethys' then chairman and CEO David Robson said the deep prospects that the company is pursuing in Tajikistan have ''super-giant'' potential. Bokhtar is part of the Amu Darya basin, the location of some of the world's largest gasfields. "Geological and geophysical work undertaken has shown that Tethys is operating in a world-class basin with enormous and untapped potential," Robson said in a statement.
He forecast that any exploration success at Bokhtar would be "transformational" for Tethys. It would have a similar impact on Tajikistan, which is seen as one of Central Asia's losers in terms of hydrocarbons resources. Now it may be on a par with countries like Kazakhstan or Russia in terms of oil and gas reserves per capita, and is potentially a major exporter.
Tethys is not the only frontier investor active in Tajikistan. In another sign of interest in the country, on August 8 Santos International Ventures said it has exercised its option to acquire a stake in Tajikistan's Somon Oil. A Santos affiliate and an unnamed third party are in "advanced stages of negotiations" on the acquisition of a 70% holding in the Tajik company, and the deal is expected to be signed by September 6.
Tajikistan's main exports today are aluminium and cotton, and it remains the poorest state in the former Soviet Union, with up to 1m of its population leaving to seek work abroad. It also relies on its neighbour Uzbekistan for gas imports during the cold winter months. The two countries' troubled relationship - and cash flow problems at power company Barki Tojik - have resulted in supplies frequently being cut off. In April, gas supplies were suspended for a month, resulting in serious damage to the Tajik economy.
To increase energy security, Dushanbe has focused on hydropower. With the lion's share of Central Asia's water resources, Tajikistan is estimated to have potential hydropower generation capacity of more than 500bn kilowatt hours (kWh) of electricity a year. However, attempts to develop the sector, especially with plans to build the massive Roghun dam, have further damaged relations with Uzbekistan. Tashkent objects to the construction of new dams on tributaries of the Amu-Darya, which is used to irrigate Uzbekistan's cotton crops. Finding substantial oil and gas reserves, however, could prompt Dushanbe to rethink its energy policy, which could lead to a seachange in its relations with Uzbekistan.
The news does, however, come at a difficult time for Tajikistan, as an outbreak of violence in the eastern Gorno Badakhshan autonomous region (GBAO) has raised questions once again over the country's stability.
Fighting broke out in and around the regional capital Khorog on July 24, as government forces took on a militant group believed to have been behind the assassination of regional security chief Major-General Abdullo Nazarov. Over 3,000 additional troops supported by helicopter gunships are reported to have been sent to the region, which borders Afghanistan, to bring the insurgency under control. The government was successful, with rebels starting to surrender on July 29.
The last time an operation of this scale was launched in Tajikistan was in 2010, when a mass prison break from a high-security facility near Dushanbe was followed by a series of bombings and other incidents. Government forces fought for several months to regain control of the Rakhsh Valley, which like GBAO was an opposition stronghold in the 1992-97 civil war. Opposition activists have claimed that Nazarov's murder was the pretext for the government to increase its hold on the region, while the Strategic Research Centre under the President of Tajikistan, a think-tank linked to President Emomalii Rakhmon, says the government took action after reports of up to 1,000 militants massing on the Afghan side of the border.
Tensions have persisted in Tajikistan despite the power-sharing agreements between the government and opposition at the end of the civil war in 1997, and the continuing threat of instability is the main factor deterring higher levels of investment in the mineral-rich country, although corruption and lack of infrastructure are also factors. "The events in the GBAO demonstrate the far-reaching weaknesses of the Tajik states structures. This is the second incident in recent years where the government has had difficulty enforcing control over part of its territory," writes Marek Matusiak of the Centre for Eastern Studies (OSW) in a report. With presidential elections due to take place in November 2013, there is a danger of further eruptions of violence in the coming year.
Juha Kähkönen of the IMF - The Caucasus and Central Asia (CCA) region continues to navigate a wave of external shocks – the slump in global prices of oil and other key commodities, the slowdown ... more
Naubet Bisenov in Almaty - Caucasus and Central Asian (CCA) countries need to tighten their monetary policy to anchor inflation expectations, but excess tightening may weaken financial ... more
Peter Szopo of Erste Asset Management - No, the title of this column is not the first line of the autobiography of an erstwhile emerging markets investor – although it could be. Somebody who ... more