Gazprom to Buy Uzbek Gas so It Doesn’t Get Sent to China?

Gazprom has signed a contract to purchase Uzbek gas. The document provides for the acquisition of 4 billion cubic meters of gas per year for up to five years, starting in 2018, according to the press release of Gazprom.

In 2016, the volume of purchase of natural gas by Gazprom in Uzbekistan amounted to about 6.2 billion cubic meters.

According to Aleksey Grivach, Deputy Director of the National Energy Security Fund (NESF), one of the key reasons for the gas purchase from Uzbekistan is the need for gas supply to Kyrgyzstan, where Gazprom is the owner of the gas sector and the guarantor of supply stability. "Bishkek itself is Moscow's strategic partner and a member of the the Eurasian Economic Union (EEU)," said Grivach. “In addition, in Uzbekistan, Gazprom has a number of projects in extraction, that is, a deeper level of cooperation than with Turkmenistan, where purchase and sale relations were simple. And with the growth of gas production from Russian companies, these purchases proved to be both non-competitive and strategically unsuccessful. "

According to Igor Yushkov, the leading analyst of the NESF, Gazprom considers relations with Uzbekistan and Kazakhstan another important goal: "To contract their gas to the maximum so that they do not have the opportunity to supply their gas to China”. Gazprom needs no competitors in Russian-Chinese gas relations, explained the expert, and he says the company "is going to spend money and buy Kazakh and Uzbek gas in order to strengthen its position in the negotiations with China."

As reported by Gazprom, the head of the company Alexey Miller and the chairman of the management of NHC Uzbekneftegaz, Alisher Sultanov signed an agreement on joint exploration and organization of engineering and innovation works. In accordance with the document, the parties will study new promising fields on the territory of Uzbekistan, as well as conduct an analysis of the possibilities for organizing cooperation in the field of engineering.

The main partner of Gazprom in Uzbekistan is the National Holding Corporation (NHC) Uzbekneftegaz, which is engaged in the exploration, production, processing, transportation, storage and sale of oil and gas.

In 2002, Gazprom and NHC Uzbekneftegaz signed an agreement on strategic cooperation, according to which Gazprom is expected to participate in natural gas production projects in Uzbekistan on Production Sharing Agreement (PSA) terms.

Since 2004, Gazprom has been participating in the restoration of gas production at the Shakhpakhty field on the terms of the PSA.

In 2006, Gazprom and NHC Uzbekneftegaz signed an agreement on the main principles of geological exploration of the subsoil of investment blocks in the Ustyurt region of the republic. The operator of the project is Gazprom International. In 2009, the Jahl gas condensate field was discovered at the Shakhpakhtinsky field.

Dimitri Dolaberidze

06 April 2017 20:35