RUSSIA’S PROJECTS AND INVESTMENTS IN CENTRAL ASIA: THE OIL AND GAS INDUSTRY
Vladimir PARAMONOV, Aleksei STROKOV
Vladimir Paramonov, Ph.D. (Political Science), independent expert (Tashkent, Uzbekistan)
Aleksei Strokov, Ph.D. (Chemistry), independent expert (Tashkent, Uzbekistan)
In the 1990s, Russia’s projects and investments in the Central Asian oil and gas industry were mainly concentrated in Kazakhstan, while its interest in other states of the region were minimal. When Vladimir Putin became Russian president in 2000 and the price of hydrocarbons steadily rose, Central Asia’s importance abruptly increased. This caused the Russian Federation and Russian oil and gas companies to drastically step up their activity not only in Kazakhstan, but also in Turkmenistan and Uzbekistan. Russia has also started to show a much greater interest recently in two other states—Kyrgyzstan and Tajikistan—despite their low oil and gas potential.
Moscow’s growing interest in Central Asia was largely explained by the fact that the conditions in the region make hydrocarbon production technologically easier and economically more profitable than in the north of Russia, where most of the Russian oil and gas fields are concentrated. The Russian Federation is trying to draw as many of Central Asia’s hydrocarbon resources into its fuel and energy balance as possible in order to maintain domestic consumption without lowering the volumes of hydrocarbon export to the foreign markets, particularly to Europe.
This has resulted during the past few years in a gradual increase in the volumes of hydrocarbon export from the region to Russia. But the future plans of Russia, Kazakhstan, Turkmenistan, and Uzbekistan could make significant adjustments to this trend as their own oil and gas industries grow and energy strategies are elaborated. This is mainly due to the fact that it is far from clear whether oil and gas export from the region’s states will continue to be distributed in favor of the Russian Federation or, on the contrary, everything will become gradually reoriented toward markets outside Russia and the post-Soviet expanse. Nor is it clear whether cooperation in the deeper conversion of oil and gas will be expanded between Russia and the region’s countries. The latter is extremely important since in Soviet times, for example, it was precisely refining that determined the large (approximately four-fold greater than today) volumes of reciprocal deliveries of this so-called black gold.
So the main problem consists of two essential elements: the unpredictability of the future nature of oil and gas export from Central Asia and interstate cooperation between the Russian Federation and the region’s countries in oil and gas processing. On the one hand, the current (and in particular planned) volumes of hydrocarbon production and export in the region (and in Russia itself) could perpetrate a breakthrough in these cooperation areas. On the other hand, it is not clear whether such a major change in energy strategies is actually possible.
So an analysis of the current nature of Moscow’s project and investment activity in Central Asia’s oil and gas industry will make it possible to better understand the answers to extremely difficult questions regarding not only the prospects of Russian-Central Asian energy cooperation itself, but also the development of the entire post-Soviet expanse.
Today Russia’s strategic interests largely lie in the three Central Asian states that possess hydrocarbon resources: Kazakhstan, Turkmenistan, and Uzbekistan. Hydrocarbon recoverable reserves have still not been found in two other countries of the region—Tajikistan and Kyrgyzstan—and so Russia has…………….