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Wednesday, April 17, 2024

Uzbekistan plans $500M investment to boost Russian gas imports

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The government of Uzbekistan plans to invest $500 million on expanding capacity in its natural gas transportation system to enable a significant increase in imports from Russia, according to reporting by news website Gazeta.uz.

Uzbekistan, whose own gas reserves have not been sufficient to meet annually surging demand, started receiving supplies of the fuel from Russia in October 2023, marking a milestone in diversifying its energy sources. Under a two-year contract, Uzbekistan secured gas imports totaling 9 million cubic meters per day, equivalent to approximately 2.8 billion cubic meters annually, to alleviate energy shortages and bolster domestic energy security.

The investment plans covering the period from 2024 to 2030 are intended to support efforts to boost gas imports from Russia to 15 million cubic meters per day, or around 4.6 billion cubic meters per year, by 2026. The project will focus on upgrading the main gas pipelines, compressors, and metering stations, as well as enhancing the reliability and safety of the gas transportation system.

Financing for the modernization initiative will be sourced through foreign loans obtained from international financial institutions, such as the Asian Development Bank and the World Bank. The decision to prioritize gas import enhancements comes in the wake of a significant energy crisis experienced by Uzbekistan during the winter months, attributed to extreme cold weather conditions. Government reports indicated a shortfall of up to 20 million cubic meters of gas per day during peak demand periods across the country.

President Shavkat Mirziyoyev admonished officials for inadequate preparation ahead of the winter season, highlighting the need for robust measures to address energy resource deficits and ensure uninterrupted supply to consumers. In response to the energy crisis, Uzbekistan embarked on a multifaceted strategy to augment its energy resources, including the intensified import of gas, electricity, coal, and fuel oil.

Uzbekistan and Russia are also in talks to finalize a fresh, extended gas agreement, which may involve higher quantities of gas being supplied, as well as cooperation on gas exploration and production in Uzbekistan. The two countries have also expressed interest in developing joint projects in the petrochemical and fertilizer sectors, as well as expanding trade and investment ties.

The gas cooperation between Uzbekistan and Russia is seen as a strategic partnership that benefits both sides, as well as contributes to regional stability and development. Uzbekistan, as a transit country for gas exports from Turkmenistan and Kazakhstan to Russia and China, plays a key role in ensuring energy security in Central Asia. Russia, as a major gas producer and exporter, offers Uzbekistan a reliable and affordable source of energy, as well as access to advanced technologies and expertise.

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