RUSSIA’S PROJECTS AND INVESTMENTS IN CENTRAL ASIA: THE OIL AND GAS INDUSTRY
Abstract
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.
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The evaluations are estimates obtained on the basis of published information on the investment volume for each project in each of the region’s countries.
Until 1996, PetroKazakhstan was the State Iuzhneftegaz Company established in 1993. In 1995, LUKoil and Iuzh-neftegaz created the Kumkol North development joint venture. In 1996, Canada’s Hurricane Hydrocarbon Company acquired 89.5% of the shares of Iuzhneftegaz, after which this company was renamed PetroKazakhstan. At present, PetroKazakhstan belongs to China’s PetroChina and KazMunaiGaz.
Oil is being transported along this 697-kilometer pipeline put into operation in 1970 from the fields of the western part of Kazakhstan to Russia’s Samara Region.
Oil is transported via this pipeline, which was put into operation in 2001 (it is approximately 1,510 km long), from the western part of Kazakhstan (the Tengiz field) to the Russian port of Novorossiisk (and on by tankers through the Turkish straits—the Bosporus and Dardanelles).
LUKARCO BV, Russia has 12.5% (326 million dollars) and Rosneft-Shell Caspian Ventures Ltd., Russia has 7.5%
million dollars).
The Soiuz and Orenburg-Novopskov main gas pipelines, each 760 km in length, were put into operation in Soviet times (the Orenburg-Novopskov in 1976 and the Orenburg-Soiuz in 1978). Gas is transported via these pipelines from the Orenburg Region to the Saratov Region of Russia through the Ural Region of Kazakhstan.
The Soiuz and Orenburg-Novopskov gas pipelines had a throughput capacity of 42 bcm a year (total) at the time they went into operation. In 2004, their actual throughput capacity amounted to around 30 bcm a year due to wear and tear of the infrastructure. But in 2004, Kazakhstan began reconstructing and modernizing these pipelines. Today the throughput capaci-ty of these gas pipelines amounts to a total of 47 bcm a year. Precisely this amount of gas is planned to be pumped in 2008.
Oil is transported from Russia to the European countries via the Druzhba pipeline which went into operation in 1964 (it is approximately 6,000 km in length). The Adria oil pipeline is a system consisting of two sections: the Hungarian sec-tion passes through Hungary from the city of Százhalombatta to the Hungarian-Croatian border, and the other section—the Jadran oil pipeline—passes from the Hungarian-Croatian border through Croatia to the port of Omišalj (Croatia, the coast of the Adriatic Sea). The total length of the route via which oil is to be transported from Samara through Russia, Belarus,Ukraine, Slovakia, Hungary, and Croatia to the port of Omišalj is 3,087 km.
The agreement between Gazprom and Uzbekneftegaz on the main principles of conducting geological exploration of the subsoil of investment blocs in the Ustiurt Region of Uzbekistan; PSA between Gazprom and Uzbekneftegaz for the Urga, Kuanysh, and the Akchalak Group fields.
The Bukhara-Ural gas pipeline is intended for delivering Uzbek gas from the Gazli field (Bukhara Region of Uz-bekistan) to the industrial centers of Russia’s South Ural Region.
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