Russia's international debut as a natural-gas power took place on January 1, 2006. On that day, shipments of Russian gas to Western Europe suddenly dwindled in a chain reaction triggered when Russia shut off gas supplies to Ukraine in the midst of a price spat between the two countries.
Supplies were soon restored, but a hastily fashioned agreement between Russia and Ukraine on January 4 revealed the growing importance of Central Asian gas to Russia. Subsequent talks between top-level Russian negotiators, including President Vladimir Putin, and the leaders of Uzbekistan and Turkmenistan drove the point home -- Central Asia's gas reserves are now poised to play a decisive role not only in the region's relations with Russia, but in Eurasian geopolitics as well.Gazprom's FortunesRussia's rising appetite for Central Asian gas is a direct result of the shifting fortunes of Gazprom, the state-run Russian company that controls lucrative exports. The company's total gas production has flatlined at around 550 billion cubic meters (bcm) a year. With major fields yielding less as they age, Gazprom has chosen to maintain its all-important gas balance by purchasing gas on the side -- from independent producers in Russia and from Russia's Central Asian neighbors -- instead of investing in the lengthy and costly development of untapped Arctic fields, former Deputy Energy Minister Vladimir Milov explained in a December 26 article in "Novaya gazeta."Maintaining the gas balance is crucial because Gazprom needs to keep up both domestic shipments, which serve to preserve social stability and subsidize the Russian economy, and exports, which produce profits. Domestic shipments at regulated, reduced prices totaled 258 bcm in 2004 and 325 bcm in 2005, when they generated losses of nearly $1 billion, Prime-TASS reported on November 29. Exports to the West, which account for the bulk of Gazprom's profits, are planned at 151 bcm in 2006 and set to rise to 163 bcm by 2008, Prime-TASS reported on November 23.Faced with declining yields at home and rising demand across the board, Gazprom is looking south to make up the difference. In an October 2005 book titled "The Future Of Russian Gas And Gazprom," Professor Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies, argues that Gazprom will undergo a signal shift in coming years, with dependence on Russian production giving way to "imports of around 100 bcm [a year] from Central Asian countries -- Turkmenistan, Kazakhstan, and Uzbekistan."Publicly available plans confirm the upward tendency of Stern's projections. Gazprom plans to buy 9 bcm from Uzbekistan and 30 bcm from Turkmenistan in 2006, ferghana.ru reported on January 23. Purchases from Turkmenistan are slated to go to 70-80 bcm a year by 2007-08, Prime-TASS reported on November 30. With these boosts looming on the horizon, Gazprom hopes to expand the capacity of the Central Asia-Center pipeline, which links Turkmenistan and Russia through Uzbekistan and Kazakhstan, from current levels of 42 bcm/year to 55 bcm/year, and is considering another project linking Central Asia and Russia with throughput capacity of 30 bcm/year, Prime-TASS reported.The Rest Of The StoryBut the raw figures tell just one part of the story: Russia's increasing dependence on Central Asian gas. Price is another crucial factor in the equation, while politics is perhaps the most important factor of all. Both have been on prominent display in recent high-level contacts among Uzbekistan, Turkmenistan, and Russia.Uzbekistan, a minor supplier of Central Asian gas and a major transit country for shipments to Russia from the region, has seen a deep freeze descend on its relations with the West after the violent suppression of unrest in Andijon in May. At the same time, Tashkent and Moscow have bolstered ties and brokered deals. Uzbekistan expelled the United States from its air base at Karshi-Khanabad in July amid U.S. calls for an independent international investigation of eyewitness accounts that Uzbek security forces massacred hundreds of unarmed demonstrators in Andijon. Russia, by contrast, strongly supported Uzbek President Islam Karimov's actions in Andijon, and in November Karimov and Putin inked a treaty that provides for mutual military assistance in the event of "aggression."Central Asian DealsThe deals have not lagged far behind. Gazprom head Aleksei Miller recently reached an agreement with President Karimov for Russia to buy 9 bcm of Uzbek gas at $60 per 1,000 cubic meters in 2006 (see "RFE/RL Newsline," January 23, 2006). On January 25, when Uzbekistan joined the Eurasian Economic Community (Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan) at a summit in St. Petersburg, Russia, Gazprom was expected to sign two agreements with Uzbekistan pledging $1.5 billion in Russian investments in Uzbekistan's energy sector, AP reported.Turkmenistan, a far more important source of gas for Russia in coming years, has proven a tougher nut to crack. Mercurial Turkmen President Saparmurat Niyazov, whose self-obsessed initiatives have included renaming the months of the year after himself and members of his family, is a notoriously slippery negotiating partner. The tentative January 4 compromise between Russian and Ukraine depends on affordable Turkmen gas, but the actual contracts are not yet set in stone.A Turkmen-Ukraine agreement for Ukraine to buy 40 bcm of Turkmen gas at $50 per 1,000 cubic meters in 2006 exists "only in verbal form," according to Russia's "Vremya novostei." Meanwhile, questions surround a Russian agreement to buy 30 bcm of Turkmen gas at $65 per 1,000 cubic meters in 2006. For one, it is unclear how the amounts tally, since official statistics put Turkmenistan's total production in 2005 at 63 bcm, with exports amounting to 45 bcm (see "RFE/RL Newsline," January 12, 2006). Second, Russia's "Vedomosti" reported on January 13 that Turkmenistan would like to raise its export price for Russia to $85 per 1,000 cubic meters, which would torpedo the carefully calibrated Russian-Ukrainian compromise. While Turkmen diplomats denied the "Vedomosti" report, a January 23 meeting between Presidents Niyazov and Putin failed to clarify the prices and volumes of Turkmen gas exports to Russia and Ukraine in 2006, "Kommersant" reported on January 24.Turkmenistan's DealingsFurther complicating the Turkmen situation are Niyazov's plans to expand exports against a backdrop of untested production capacity and murky information about reserves. Shortly before Niyazov traveled to Moscow, Zhang Guobao, deputy minister of China's National Development and Reform Commission, visited Ashgabat to draft an agreement for Turkmenistan to export 30 bcm a year to China via a projected pipeline through Uzbekistan (see "RFE/RL Newsline," January 18 2006). Gas-hungry Pakistan is also eager to see a pipeline through Afghanistan, security considerations permitting, to carry an equal amount of Turkmen gas.When Platts Oilgram News queried Christof Van Agt, the International Energy Agency's Central Asia administrator, on January 4 about President Niyazov's ambitious plans, Van Agt replied: "If Turkmenistan is to meet Chinese and South Asian aspirations of 30 bcm/year apiece, while maintaining historic Ukrainian and Russian deliveries, production will have to double to around 130 to 140 bcm/year, or roughly 50 percent above pre-independence capacity of 90 bcm/year."While Turkmenistan's ability to ramp up production remains as unclear as the true extent of its gas reserves, the existence of other customers and export routes could prove a powerful bargaining chip in future price negotiations with existing partners, like Russia. In a pointed hint, a report on the publicly inconclusive January 23 Putin-Niyazov meeting by Turkmenistan's official TDH news agency mentioned not only recent Chinese-Turkmen talks, but also meetings between Turkmen officials and Turkish Energy Minister Mehmet Hilmi Guler, whose country could provide an alternate export route for Turkmen gas through a trans-Caspian pipeline.Political ConsiderationsYet another factor in Russia's increasing energy dependency on Central Asia is the internal political situation in Turkmenistan and Uzbekistan, both undemocratic regimes ruled by aging strongmen. In Turkmenistan, where Niyazov has effectively reduced the political system to his own person, the short-term and long-term prospects for stability come with serious caveats. Similar concerns affect Uzbekistan. Succession remains an unresolved issue in both countries.Tellingly, while both Turkmenistan and Uzbekistan are gas exporters, reports point to problems with domestic supplies. In one of President Niyazov's populist initiatives, gas is free inside Turkmenistan, but Deutsche Welle reported on January 23 that apartments have been chilly during a recent cold snap. Doctors in Ashgabat told Deutsche Welle that they are treating many patients for illnesses contracted as a result of cold conditions in unheated apartments. Similar hardship is evident in Uzbekistan, according to RFE/RL, where dozens of women blocked a road in Andijon on January 21 to protest a lack of gas and electricity.
Daniel Kimmage is the Central Asia regional analyst with RFE/RL Online and editor of the "RFE/RL Central Asia Report." He also writes about the Arab world and Russia with a particular focus on the ideology of Islamist movements. He holds an M.A. in Russian and Islamic history from Cornell University. He previously worked as a journal editor at the Institute of Oriental Studies in St. Petersburg, Russia.
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