Russia to sell gas to Uzbekistan through reversed flow Soviet-era gas pipelines

Russia to sell gas to Uzbekistan through reversed flow Soviet-era gas pipelines
Russia will reverse the flows of Soviet-era gas pipelines and sell gas to the energy-hungry Uzbekistan. / bne IntelliNews
By Ben Aris in Berlin May 9, 2023

Russia will sell gas to the energy-hungry Uzbekistan by reversing the flow of the Soviet-era gas pipeline network that used to transport Turkmen gas to Russia.

Russia is on the hunt for new customers after its gas deliveries to Europe have been slashed by sanctions and the war in Ukraine. Russia used to deliver some 150bn cubic metres to Europe a year, but will only send an estimated 25 bcm this year, according to the International Energy Agency (IEA).

Uzbekistan is keen to buy the gas, as unlike its neighbours Kazakhstan and Turkmenistan it only has modest gas deposits and can’t cover its own domestic needs with its own resources.

The plan is to reverse existing Soviet-era gas pipelines that used to take gas out of Central Asia and deliver it to Russia by building new compressor stations. Uzbekistan suffered from debilitating gas shortages this winter, as its rapid economic growth of recent years means demand for gas has outstripped its supplies.

Uzbek Energy Minister Jurabek Mirzamakhmudov recently announced that Russia would be supplying gas to Uzbekistan via the Soviet-era Central Asia-Centre gas pipeline network – one of three gas pipelines that traverse Uzbekistan. The other Russian pipeline is the Bukhara-Urals pipeline. The third pipeline is more modern, built by the Chinese after the fall of the USSR: the Central Asia-China pipeline, a 3,666-kilometre gas pipeline that begins at Gedaim, on the Turkmenistan-Uzbekistan border, and ends at Khorgos, in China’s Xinjiang region.

Moscow and Beijing are reportedly now calculating the costs for the construction of compressor stations, which are required for the reverse pumping of gas through the link, but the pipeline is due to come online this year.

While the new Uzbek deal will not replace the lost European gas business, the deal is part of Russia’s efforts to re-orientate its gas business from west to east. During the Soviet-era, Russia sold the bulk of its gas (c70%) to the European market and very little to Asia. Since 1991 Russia has built a modest oil and gas pipeline to the Far East to service Asian markets and more recently the Power of Siberia gas pipeline to China, which currently carries about 15 bcm a year, but will be expanded.

Uzbekistan has been importing gas from Russia since 2020, with Gazprom supplying Turkmen gas to Uzbekistan. In 2020, 900mn cubic metres were supplied per annum, increasing in the first quarter of 2021 to 1.5 bcm, so the volumes are still a fraction of the European business.

Russian President Putin has emphasised the importance of establishing transport and energy trade with the energy producers of Central Asia, namely Uzbekistan, Kazakhstan and Turkmenistan. Discussions about Russian gas exports to Uzbekistan go back to 2002, when Putin announced plans to create an integrated Eurasian gas space.

However, Uzbekistan remains wary of making the same mistake Germany did by becoming overly dependent on Russian energy.

In November 2022, Putin announced the possibility of a gas union between Kazakhstan, Uzbekistan and Russia, with the prospect of further sales to China, Pakistan and India. However, Uzbek Energy Minister Mirzamakhmudov publicly dismissed the offer in December 2022, stating that Uzbekistan “would not agree to political conditions for obtaining natural resources”, but only on a commercial basis.

Nevertheless, the three countries have been moving towards closer energy co-operation. On January 18 this year Gazprom and the government of Kazakhstan signed a roadmap for collaboration in the gas industry and Uzbekistan signed the same a week later.

The proposed gas plan would see Russian gas transported to Uzbekistan via Kazakhstan through the Central Asia-Centre pipeline.

As for the prospects of exporting Russian gas via Uzbekistan to South Asia, that could happen but only sometime in the future. For the meantime, Uzbekistan plans to stop selling gas to foreign buyers completely by 2025, as it requires more energy to power its fast growing economy. Its main export partner for gas is currently China, but Tashkent has previously fallen short on its export promises in order to meet its own domestic demand, much to the chagrin of Beijing.