CHAPTER 4. THE ENERGY ISSUE IN THE CENTRAL ASIAN REGION
hydrocarbon reserves, the region has huge hydro-power capacity, large deposits of uranium, and favourable conditions for the development of non-conventional renewable energy (Annex 4.1a).
The ratio between the natural resource potential and the volume of mined/generated energy indicates the time of availability for a particular resource in a country or the whole region (self-sufficiency). In 1998, this indicator for proven recoverable coal reserves stood at more than 600 years; for oil, 65 years, and for natural gas, nearly 75 years.216 But these figures may be seen as conditional and subject to change regularly, especially after a number of oil and gas projects in the Caspian area, such as Eastern Kashagan, Karachaganak of Kazakhstan, the Ustyurt region in Uzbekistan, Dauletabad in Turkmenistan are discovered and launched with the help of foreign investments.
One needs to be careful in treating estimates of this kind, as they could embrace some degree of both objectivism and subjectivism. On the one hand, it is obvious that with time gone by, such figures are destined to reconsideration, since new fields are discovered as the volume and geography of research and exploration works tend to expand in the region. Yet, the level of knowledge about the true resource base leaves much to be desired, due to lack of funds for conducting research projects.
On the other hand, there could be some differences of a methodological nature. However, the aforementioned two explanations may not be sufficient to make the whole picture clear.
Speaking broadly, it could be supposed that these estimates would also be a result of long-run geopolitical and strategic interests, both domestic and external, as an opportunity to secure political support of far-going economic concerns. If domestically, it is the government itself which is interested in showing bigger resources potential to encourage foreign investments;
then, from the “outside” these heightened interests are expressed by influential multinational corporations majoring in extraction and development of profitable energy resource base across the globe. Moreover, in recent years such corporative interests are more often merged with the national political priorities that encourages us to consider them in a close interaction.
From this point of view, Central Asia, a specific region located on the cross-roads of regional
of another 38 bln.barrels, and gas 71 and 159 trln.cubic feet, respectively; Uzbekistan’s current oil 0,6 bln.barrels with potential of 2 bln., and gas of 66 trln.cubic feet with potential of 35 trln.cubic feet, respectively. The French estimates say about 70-250 bln.barrels of oil reserves;, the British showed more restrained 28 bln.barrels of oil and 243 trln.cubic feets of gas; Russian experts believe that there are 7 to 8 bln.tonnes of oil and 5 trln.m3 of gas in the whole Caspian region. Sources:
Energy Information Administration http://www.eia.doe.gov/emeu/cabs/caspstats.html. See also: Testimony by John J.Maresca, Vice President of UNOCAL Corporation (USA) to House Committee on Asia and the Pasific. 12 February 1998, Washington D.C. See also: Babak V. Kazakh Oil: Economic Booster or Dead Weight? Central Asia and Caucasus, 2001;
Patridge D. Central Asia: How Vast are the Riches in the Caspian?. RFE/RL, London, 16 July 1998
216 Diagnostic Report on Energy Resources in Central Asia, http://centrasia.cintech.ru/energy-eng.pdf
and international interests on the entire Euro-Asian continent, could be considered as a target of international expansion on different levels.
The region also has huge hydroenergy potential. Estimates show that just over 10% of the hydropotential are currently utilised. Consequently, it gives an ample opportunity to meet the growing demand of the region for electric power through the use of relatively cheap hydro-power resources, provided this does not conflict with the irrigation needs of the region's countries.
Geographically an uneven distribution of energy resources could represent the following picture: a large part of proven recoverable coal and oil reserves is found in Kazakhstan, while Kyrgyzstan and Tajikistan are the best endowed in hydropower, with natural gas reserves more evenly divided between Turkmenistan, Uzbekistan and Kazakhstan (Annex 4.1b).
The geographical structure of fuel and energy production and consumption in Central Asia shows that Kazakhstan and Uzbekistan are to account for more than 80% of the total production and consumption each, with Kazakhstan being the largest producer of primary energy in the region (oil and coal), and Uzbekistan topping the list of consumers (oil, gas and electricity, Annex 4.2).
Availability and accessibility of certain categories of primary energy in Central Asian countries have largely determined their consumption structure. Thus, Kazakhstan also mostly consumes coal, Kyrgyzstan and Tajikistan - hydro-power, and Turkmenistan and Uzbekistan - oil and natural gas. Comparative data on consumption structure for the whole region by type of primary energy resource is shown in Table 4.1.
Table 4.1. Structure of Regional Energy Consumption, %
1992 1999 2002*
Coal 29.5 22.3 23.3
Oil and oil
products 29.8 21.3 19.4
Natural gas 37.9 53.1 56
Hydro power 2.2 3 3
Net import 0.6 0.3 -1.7
Source: Diagnostic Report on Energy Resources in Central Asia; * calculations based on IEA statistics
Natural gas accounts for more than a half of total energy consumption in Central Asia, with two thirds of it consumed by Uzbekistan. Coal comes second, with more than 90% consumed in Kazakhstan. The region's hydroelectric energy resources are concentrated in Kyrgyzstan and Tajikistan which produce nearly two thirds of all hydropower. In addition, there are some
differences in energy consumption by country and the type of energy resource. For instance, in Kazakhstan, petroleum products are mostly consumed by industrial enterprises, whereas in Kyrgyzstan, Tadjikistan and Uzbekistan the main share of consumption falls to transport.
Coal is the basic fuel used by power stations in Kazakhstan, accounting for over 70% of the total power generation. The electric power sector in Kyrgyzstan and Tajikistan is based on hydropower, while natural gas is the main input in the electric power stations of Turkmenistan and Uzbekistan. Industry and public are the main consumers of electric power in the region.
Let us now touch upon the issue of energy interdependence between the republics. This factor is crucial, since it had an influence on inter-state relations in the past and will obviously sustain in the future. The logic of regional cooperation is also much determined by this factor.
“...In Central Asia Uzbekistan takes a central place from the point of view of geopolitical location, and the republic has thus a potential to provide equality and balance of powers, as well as to create a basis for cooperation in the region. The territory with existing and potential reserves of natural resources reinforces its particular position on the political and economic map of the world”.217
“Hydroenergy capacities in the republic are not used to a full extent. The fuel and energy complex of Uzbekistan not only meets the increased domestic demand for energy resources.
Since many years Uzbekistan has been supplying its natural gas to other countries too”.218 Uzbekistan is the only republic which has borders with all the republics of the region. If on the one hand, the republic could serve as a hub of intraregional relations, on the other hand the country itself becomes largely dependent on its neighbors. Uzbekistan has been the largest gas producer in the region in the last years which allowed for some export to be available to the neighbor states: Kazakhstan, 900 mln. – 1.2 bln.m3, Kyrgyzstan - 1.1 bln.m3, and Tajikistan 500 mln.m3 on average219 (Table 4.2.). Gas is mainly supplied through the Soviet-time Tashkent-Bishkek-Almaty gas pipeline (capacity almost 22 bln.m3) which runs through northern Kyrgyzstan to Southern Kazakhstan, and Gazli-Shimkent pipeline (13 bln.m3) (Annex 4.3).
217 Translated by the author from I.Karimov (1997) Uzbekiston XXI asr bosagasida: havfsizlikka tahdid, barqarorlik shartlari va tarraqiyot kafolatlari. Extract from the collection „Uzbekiston – buyuk kelajak sari“.
Tashkent, 1998. p.600. The President’s book contains a specific chapter elucidating the natural resource potential of the republic.
218 Translated by the author from I.Karimov (1993) Uzbekiston – bozor munosabatlariga otishning oziga xos yuli. Extract from the collection „Uzbekiston – buyuk kelajak sari“. Tashkent, 1998. p.95.
219 Uzbekistan Hopes to Be Key Gas Exporter. http://www.interfax.com/com?item=Uzb&a=on&id=5762680
Table 4.2. Major Gas Export Markets of Uzbekistan
1996 1997 1998 1999 2000 2001 Mln.
m3 Share,
% Mln.
m3 Share,
% Mln.
m3 Share,
% Mln.
m3 Share,
% Mln.
m3 Share,
% Mln.
m3 Share,
% Kyrgyzstan 1039 17 934 12 1158 31 598 13 775 14 504 12 Kazakhstan 523 8 1829 23 1831 49 1398 31 1355 24 945 22 Tajikistan 563 9 882 11 755 20 747 16 729 13 416 10
Ukraine 4037 66 4253 54 - 0 1788 39 2759 49 2463 57
Total 6236 100 7971 100 3744 100 4530 100 5618 100 4328 100
Source: Uzbekistan. Energy Sector: Issues, Analysis, and an Agenda for Reform. World Bank, June 2003. p.26.
Kyrgyzstan has relatively small gas reserves, totally estimated at about 5,5 bln.m3. Since Independence, domestic gas production declined from 0,097 bln.m3 in 1992 to 0,014 bln.m3 in 2000. As a result, the northern territories of Kyrgyzstan are dependent on natural gas imports from Uzbekistan, while Turkmenistan supplies gas to the Southern part of the country.220 Regardless of its huge gas reserves, the gas sector of Kazakhstan remains underdeveloped.
Especially, the sector’s development is hampered by lack of infrastructure. While deposits are mainly located in the western part of the country, the large consumer areas are located in the north and south. Although the structure of energy consumption is quite contrary to that of Uzbekistan (with 75% of coal and only about 15% for gas), lack of internal routes connecting the gas fields in the west to industrial and residential consumers in Almaty, Djambul and Shymkent, made some regions strongly dependent on Uzbekistan’s gas supplies. With 2000, natural gas consumption of more than 13 bln.m3, Kazakhstan imports about a third of its natural gas needs, mainly from Uzbekistan and Russia.
Uzbekistan is the largest part of the Central Asia Power System (CAPS) which was developed in Soviet times and completed in 1991. Uzbekistan generates 51% of the total power in CAPS, Tadjikistan – 15%, Kyrgyzstan – 14%, Turkmenistan – 11%, Kazakhstan – 9%.221 The Unified Dispatch Center (UDC) is located in Tashkent and responsible for maintaining the balanced and synchronized operation of the power transsmission and distribution systems of the five Central Asian republics. Yet, an ad-hoc inter-state Central Asia Power System Council was set up in the early 2000 consisting of the local officials from respective energy bodies in each country. A number of sessions have been already held whose main tasks was to tackle to the general coordination of power energy consumption and production throughout the region via sustainable supply and transmission of energy between rich and
220 Energy Information Administration, http://www.eia.doe.gov/emeu/cabs/contents.html
221 Mavlany J. The Energy Sector of Uzbekistan. Business Information Service for NIS, 18 June, 2001
poor regions.222 In addition, it was confessed that the development of adequate legislative documents to enhance the role of this new organ in addressing energy problems across the region. Since both the CAPS and UDS are currently in need of upgrading and modernisation to avoid electricity losses, it would also require close interaction on the regional level to attract foreign assistance. Recently, the Asian Development Bank approved $600000 project for modernisation of electricity system in Uzbekistan and Tadjikistan which is expected to increase energy efficiency in the entire Central Asian energy system.223
Uzbekistan is an exporter of electricity in Central Asia, though it also imports electricity for domestic needs. In 2002, Uzbekistan produced more than 49 bln.KWh of electricity, of which about 1 bln.kWh was exported to Tadjikistan, Kyrgyzstan, and Kazakhstan. But it is the small countries Kyrgyzstan and Tadjikistan which possess untapped hydropower potential, 10% of which is only used so far. Gas and electricity exports to Kyrgyzstan in winter help Uzbekistan obtain excessive water and electricity from Kyrgyzstan in summer periods. The given process is strongly linked to Intergovernmental Irrigation Agreements between the two countries concluded regularly on bilateral basis.
Uzbekistan, in turn, is dependent on the other republics too in that it concerns their infrastructure facilities. The republic has to cross the neighboring countries, so that to keep up its exports and imports activities. There are the two pipelines - Central Asia-Center and Bukhara-Ural going back in Soviet times. The first of them brings natural gas from southern Uzbekistan and goes to North-Western direction through the territory of Western Kazakhstan, and further to the north finally joining the Russian pipeline system. The second pipeline is used little. Both pipelines are in poor state and need modernisation. Kazakhstan and Turkmenistan have already invested into the modernisation of their own parts, since both of them express keen interests in getting it restored. For Turkmenistan, it is almost the only opportunity to maintain its high gas export level, while Kazakhstan is well positioned to rely upon transit fees.224
In turn, Uzbekistan supplies gas to Tadjikistan partly as a fee for both rail transit services and the use of a transit pipeline which crosses the Leninabad region in northern Tadjikistan and links Uzbekistan’s regions in Ferghana Valley with its Bukhara natural gas fields in the south
222 Press Release of Kazakhstan Elictricity Grid Operating Company On the Results of the Central Asian Integrated Power Grid Council 45th Session of 13 May 2002.
http://www.kegoc.kz/index.php3?numberPage=11&lang=eng&parent_id=1089876325
223 Asian Bank to Support Uzbek Government’s Energy Saving Policy. www.uzreport.com. 13 March 2003
224 According to some data, Kazakhstan’s benefits from such fees may run up to $400 mln. per year. Energy Information Administration, http://www.eia.doe.gov/emeu/cabs/contents.html
and west.225 Therefore, exports advantages to supply energy resources within the region are intertwined and balanced with the relatively unfavorable geographical location and dependency of Uzbekistan on regional infrastructure to reach the third countries. Therefore, it is a full set of political and economic factors, both domestic and regional, which could determine the essence of advantages/disadvantages of any state in the regional scale.