Page 5 - FSUOGM Week 15 2021

FSUOGM COMMENTARY FSUOGM

Lukoil's Kandym gas
project in Uzbekistan.

both Russian and Uzbek institutions, will fund (NPP), but the project has languished because
the purchase of Russian products and services. of difficulties raising financing.
Uztransgaz runs a network of some 13,000 The other dominant player in Uzbek energy
km of trunk gas pipelines, most of which was is China, which also receives the country’s gas
constructed over half a century ago. Its poor state and whose state-owned oil companies invest in
means Uzbekistan routinely struggles with sup- Uzbek gas fields. And Moscow is eager not to be
ply disruptions, even though it is a net exporter displaced by Beijing in the top spot.
of gas. Since Mirziyoyev came to power, Uzbeki-
The Asian Development Bank (ADB), which stan has sought to pursue a more multi-vectoral
helped Uzbekistan plan the modernisation work, foreign policy, reaching out to investors and
estimates that many of these pipelines have not business partners from various countries. In
been inspected properly in 25 years, leading to particular, Tashkent has reached out to Western
technical losses amounting to up to 15% of total partners, although it is yet to strike any upstream
supply. This not only represents a significant investment deals with them.
economic cost but also an environmental one, Current bearish conditions make the hunt
given than methane compressor stations are also for investors all the more difficult. Many inter-
in bad conditions, operating at less than 35% of national oil companies (IOCs) are also scaling
their capacity. back their operations to focus on core areas and
pay off debts. BP notably reached a preliminary
Russian influence agreement with Azerbaijan’s SOCAR to explore
Russia is by far the biggest player in Uzbekistan’s two blocks in Uzbekistan’s Ustyurt region in
energy industry, mirroring the strong influence 2019. But the UK major has since said it will
that Moscow wields in Tashkent. The Central not explore for oil in countries where it does not
Asian state’s biggest foreign investor is Russia’s already have a presence, making it unlikely that
Lukoil, the operator of Kandym-Khauzak-Shady this deal will be completed.
and South-West Gissar gas fields. Lukoil has A large-scale privatisation programme
expressed interest in exploring other areas of planned in Uzbekistan will provide an opportu-
Uzbekistan, while Gazprom has other upstream nity for both China and Russia to expand their
projects in the country besides M25. influence in Uzbekistan. In a presidential decree
Beyond oil and gas production, Russia is also announced in October last year, Mirziyoyev
a key buyer of Uzbek gas and a supplier of petro- called for the full or partial sale of 32 of the coun-
leum products to the Central Asian state. Its state try’s largest state companies, including national
atomic energy concern Rosatom also wants to oil company (NOC) Uzbekneftegaz. Hundreds
build Uzbekistan’s first nuclear power plant of smaller entities will also be divested. ™

Week 15 14•April•2021 www. NEWSBASE .com P5