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Gazprom Pays Peanuts for Uzbekistan's Gas But Investments Continue

Russia’s energy behemoth Gazprom has revealed the amount it is paying in a mid-term deal for the delivery of natural gas from Uzbekistan, and it is not very much.

RIA-Novosti reported on April 12 that Gazprom Export, an affiliate of the Moscow-based company, said its five-year contract to supply 4 billion cubic meters of gas annually from 2018 is worth a total of $2.5 billion. That translates into $125 per 1,000 cubic meters delivered.

The deal struck at the start of April has been cast as historic for how long it runs before expiring — long enough to ensure some certainty of cash transfers in economically uncertain times, but not so long as to make the hedge feel semi-permanent. Gazprom has historically favored calculating gas supply agreements in Central Asia in decades rather than single years.

Despite that spin, the deal evidently signals a noteworthy withdrawal by Russia from the Central Asian market. Gazprom bought 6.2 billion cubic meters of gas from Uzbekistan in 2016 and is buying only 5 billion cubic meters this year, so the five-year deal represents another drop.

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Gazprom Pays Peanuts for Uzbekistan's Gas But Investments Continue

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