It seems the “tripartite gas union” proposed by Putin last year, from which Kazakhstan and Uzbekistan initially disassociated themselves, is taking shape after all. Following Russia’s invasion of Ukraine, any closer cooperation with Russia looks both risky and inconsistent, since Central Asian countries have been trying to distance themselves from an increasingly aggressive Moscow for the past year. But viewing revanchist Russia as the main threat to Central Asian states is more of an outside perspective. Local regimes are far more concerned by smoldering domestic discontent than by Moscow’s geopolitical ambitions, since the former could translate into socioeconomic protests at any moment. The events of this winter have demonstrated that gas shortages may well become the final straw.
At first glance, resource-rich Kazakhstan and Uzbekistan should have no problems with gas. Kazakhstan has over 3 trillion cubic meters of natural gas reserves, while Uzbekistan has 1.8 trillion cubic meters. The countries annually produce over 30 and 50 billion cubic meters of gas, respectively.
In theory, those volumes should be sufficient for both domestic consumption and exports. Uzbekistan’s then energy minister Alisher Sultanov claimed in 2021 that the country had enough gas “for three Uzbekistans.” Yet this winter, people across the country—including in the capital—suffered from inadequate heating. Drivers had to spend hours in line for gas, and many gas stations were closed. Kazakhstan faced similar issues.
The fact is that the countries’ gas outputs are insufficient to cover both rapidly growing domestic consumption and export obligations. The share of gas in Kazakhstan’s energy balance is constantly growing: 57 percent of people there had gasified homes by the end of 2021, as opposed to 30 percent in 2013. In Uzbekistan, gas accounts for over 80 percent of the national energy balance.
Other reasons for the annual 7–10 percent increase in domestic consumption in Uzbekistan and Kazakhstan are population growth (1.5–2 percent a year), growing construction, and industrial development. Industrial outputs are projected to increase by 4 percent in Kazakhstan and even more in Uzbekistan, which saw a record 9.5 percent growth in 2021.
In addition to their domestic needs, the countries have agreed to export gas to China, but have already fallen short of their obligations. In 2022, shortages on the domestic markets prompted Tashkent to announce a suspension of gas exports to China and Astana to reduce them. At the same time, a $380–450 million discrepancy from the Chinese statistics suggests that Uzbekistan continued to export gas, but simply didn’t want the public to know. Whatever the reality, Beijing is unhappy with the situation and has made no bones about it.
Kazakhstan and Uzbekistan might be tempted to supply China as a priority to win favor with their strategic partner and receive foreign currency revenues, but then there would not be enough for their own people, and repeated domestic energy crises threaten the stability of their political regimes.
Early last year, gas was the main driver of Kazakh protests in which over a million people took part. In Uzbekistan, this winter’s energy crisis triggered local protests, costing many high-ranking officials their jobs. For this reason, the countries are looking for another way out of the problem.
The optimal solution would be to start importing gas from Russia and Turkmenistan, since infrastructure for pumping gas from those countries is already in place. Like Russia, Turkmenistan is a global gas giant: it has the world’s fourth biggest reserves and an annual output of over 80 billion cubic meters. In 2022, Kazakhstan and Uzbekistan agreed on direct imports of Turkmen gas for the first time. But reliance on Ashgabat alone won’t solve the problem.
First, Turkmenistan has let its new partners down before. In January, Ashgabat suspended its gas exports to Uzbekistan “due to technical issues.” It also failed to meet its contract obligations to China, for which it was fined by Beijing.
Second, Turkmenistan can only supply gas: it is unable to render technological assistance. It relies on China for technology, so Kazakhstan and Uzbekistan see it as a secondary supplier only. Meanwhile, Russia can both supply gas and provide assistance with constructing and modernizing underground gas storage facilities, managing energy infrastructure, and other technological aspects.
Despite some anti-Russian pronouncements and gestures in response to the invasion of Ukraine, both Tashkent and Astana maintain close relations with Moscow. Gazprom is also very familiar with the Central Asian markets. A recent investigation by Ozodlik radio revealed that Gazprom and Uzbek oligarchs control Uzbekistan’s key oil and gas fields through a network of offshore companies.
Right now, Moscow is more interested than ever before in expanding into the relatively small Central Asian markets. Since European countries started refusing to buy Russian energy commodities, Russia has been left with a surplus of around 150 billion cubic meters of gas to sell. Uzbekistan and Kazakhstan won’t replace the European market, of course, but they could help to soften the blow.
Central Asian states could even take advantage of Russia’s current pariah status to get a better deal. Skoltech analyst Sergei Kapitonov believes that Kazakhstan and Uzbekistan may negotiate a lower price for Russian gas than the price China pays for gas from those countries. That arrangement would allow them to use Russian fuel for domestic markets while receiving foreign currency for their exports to China.
One hitch is that the public in Kazakhstan and Uzbekistan see the signing of new agreements with Russia as a sign of their governments’ weakness: a humiliating admission that the countries couldn’t solve the problem on their own. Media reports that Moscow had asked for ownership of the two Central Asian countries’ gas pipeline networks to be transferred to Gazprom were particularly contentious, and were swiftly denied by the Uzbek and Kazakh governments.
Some also speculated that by drawing its southern neighbors into closer cooperation on gas, Russia wants to gain control over Central Asian gas exports to China. But that may prove difficult, since some portions of the pipelines passing through Uzbekistan and Kazakhstan are controlled by joint companies with Chinese participation. After consistently diversifying its gas supplier network for years, Beijing is unlikely to agree to that.
In any event, Russia is due to start gas shipments to both countries this month. While no details have been disclosed—nor are they expected, since it’s risky right now to publicly discuss cooperation with Moscow—they will likely be regular shipments to cover growing domestic needs.
Closer gas cooperation with Moscow brings both dangers and rewards. On one hand, regular shipments will ensure economic growth, reassure the public, and help resolve problems with China. On the other hand, Russia will have even greater leverage over the Central Asian states. That will complicate Tashkent and Astana’s multi-vector foreign policies, and force them to indefinitely postpone the process of distancing themselves from Russia.
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