You're now on the archive server. Commenting has been disabled.
Guest Post: The Untapped Energy Riches Of Uzbekistan
Submitted by John C.K. Daly of Oilprice.com
The Untapped Energy Riches of Uzbekistan
While many Western investors remain fixated on somehow acquiring a slice of Turkmenistan’s natural gas riches, despite a recent scandal over the country’s actual reserves, there is another country further east whose energy and mineralogical reserves have been overlooked – Uzbekistan.
While a number of factors are responsible for this oversight, including relative geographical isolation (Uzbekistan, along with Liechtenstein, is one of the world’s doubly landlocked nations, requiring crossing two other nations to gain access to the oceans), which currently limits energy exports available for the global market, there are a number of pluses that the country has for investors willing to “think outside the box.”
With a population of 27 million, Uzbekistan is Central Asia's most populous and dominant power. A conservative fiscal policy since 1991, including inconvertibility of the national currency, the som, has shielded its citizens from the hyperinflation that ravaged other former Soviet republics, but the policy previously diminished potential foreign investment.
Since the global recession that began a year ago, however, Uzbekistan’s fiscal conservatism, previously dismissed by the foreign investment community, has looked more and more like a pragmatic policy that isolated the country from the worst aspects of the recession in stark contrast to other post-Soviet states that fervently embraced free market capitalism like Lithuania, whose economy contracted 18.1% this year and is expected to shrink further by 3.9% in 2010. In a move certain to be welcomed by foreign investor Uzbekistan is slowly moving towards making its currency convertible but whenever it happens, for the present the country offers a fiscal stability unmatched by many of its more free-market neighbors.
And now, the good news about the country’s resources. In 2006 Uzbekistan's natural gas reserves were estimated at 1.798 trillion cubic meters (tcm). During the Soviet era Uzbekistan was the USSR’s third-largest producer of natural gas, accounting for more than 10% of the Soviet Union’s production, trailing only Russia and Turkmenistan. In 1992, the country’s first year of independence, Uzbekistan produced 42.8 billion cubic meters (bcm) of natural gas. Uzbekistan currently produces 60 bcm of natural gas annually, an amount nearly equal to Turkmenistan's production. Uzbekistan’s reserves are primarily concentrated in Qashqadaryo province and near Bukhara in the country’s south-central region. During the 1970s Uzbekistan’s largest natural gas deposit at Boyangora-Gadzhak was discovered in Surkhandaryia province north of the Afghan border.
Unlike its energy-rich neighbors to the West, Kazakhstan and Turkmenistan, nearly 80 percent of Uzbekistan's production, about 48.4 bcm, is currently reserved for domestic use at heavily subsidized rates. Of the remaining 12 bcm of natural gas that Uzbekistan exports, more than half currently goes to Russia, with the remainder to neighboring Central Asian states.
Under Uzbekistan’s fiercely patriotic President Islam Karimov relations with Europe’s favorite bête noire, Russia’s state-owned gas firm Gazprom, have been subject to fierce negotiations to win an equitable price for the country’s exports. Like other former Soviet republics, the Uzbek government chafed under Gazprom's "buy cheap, sell dear" policies and in early December 2008 scored a significant negotiating success by getting an agreement that in 2009 Gazprom would pay $305 per thousand cubic meters (tcm). To put the accomplishment in perspective, Uzbekistan’s state gas company Uzbekneftegaz sold gas to Gazprom for $130 per tcm in the first half of 2008, which then rose to $160 in the second half of 2008.
Those betting on the eventual pacification of Afghanistan and the subsequent pipelines that would crisscross the country to deliver Central Asian gas to the massive Pakistani and Indian markets would also do well to take note of Uzbekistan’s persistent, low key policies over more than a decade attempting to bring peace to its hapless southern neighbor. The initiatives put forward by Uzbek President Islom Karimov during the NATO summit in Bucharest in April 2008 take on heightened importance as one of the few foreign policy ideas offering some hope to quelling Afghanistan’s three decades of turmoil. The text of Karimov’s address can be found here.
Nearly completely overshadowed by the Bush administration’s relentless efforts to have Georgia and Ukraine join the alliance, Karimov proposed that the UN’s Afghanistan "6 plus 2" assembly, established in 1999, be revived by expanding it into a "6 plus 3" ensemble by including NATO because of its anti-terrorist operations in Afghanistan among the "six" members Uzbekistan, Tajikistan, Turkmenistan, Pakistan, China and Iran and the "two," the United States and Russia.
Noting that that it is impossible to solve Afghanistan's problems without the direct involvement of neighboring countries, which have felt the destructive impact of the Afghan crisis for more than 30 years, as Afghanistan's problems are now of global nature, Karimov told his audience in Bucharest that their resolution must also be global, with the participation of members of the international coalition that comprise NATO's International Security Assistance Force (ISAF). Karimov concluded by noting that the current situation in Afghanistan precludes a purely military solution and that while it is possible to continue increasing the foreign military presence there, without a clear model of national reconciliation it will be impossible to end the conflict.
Needless to say, one of the benefits of peace and the aforementioned pipelines for Uzbekistan would be that it could export its surplus gas through Afghanistan to southern Asian markets for a higher price than it receives at home or Gazprom’s miserly accountants. Acting on Tashkent’s belief that economic assistance is of greater utility than military operations, Uzbekistan has become involved in a host of reconstruction projects in Afghanistan, including railways, power generation, mining, agriculture, irrigation, education and the exchange of specialists as well as providing its neighbor with construction materials, metals, fertilizer, food and other goods. Uzbek companies and engineers have built 11 bridges in the Mazar-e-Sharif-Kabul area and are finishing the construction of a 275-mile high-voltage line capable of transmitting 150 megawatts from Termez to Kabul across some of the world’s most mountainous terrain, which when it becomes fully operational next month, will provide power and light not only to the capital but the country’s five northern provinces.
For now, Uzbekistan remains largely a transit country rather than a net energy exporter in its own right. But the fiercely independent nationalist policy that Tashkent has followed since 1991 indicates that any company whose policies most benefit the country will have an inside track, and as the old saying goes, “fortune favors the bold.” Chinese, Malaysian, Russian and South Korean companies have already begun investing in Uzbekistan’s energy infrastructure – what do they seemingly know that American and European companies do not?
This article was written by John C.K. Daly for OilPrice.com - Who offer free information and analysis on Energy and Commodities. The site has sections devoted to Fossil Fuels, Alternative Energy, Metals, Oil prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com
»
- 2745 reads
- Printer-friendly version
- Send to friend
You mean the USA isn't in Afghanistan to fight for the rocks and sand ???
-1000
The Taliban are worth defeating, and the freedom of the Afghan people is worth a damn.
Yeah, the freedom of the Afghan people to have have fixed elections. If "freedom" is so important to them, let them fight for it
we are not the world police. so tell me now. after 8 years of war, do you still think that the afghans and/or the iraqis had anything to do with 911? because that was the excuse used to invade these countries. so if these poor people didn't have anything to do with the terror attack on 911, then who did?
Fuck you tinkerbell.
I am Chumbawamba.
just a note Missing_Link
the afghans have defeated the great powers over the last 300 or so years
Ottomans
British x2
Russians
US
the last successful invasion was the mongols in 1221. not bad for a land locked country with a medieval culture.
concentrate on trying to bring democracy to the US. ask Swedish and Danish organisers to monitor elections where only 19% of the population is needed to choose a president, 40% have no health cover. where a small clique of oligarchs dominate the legislature....
let the afghans destroy their own country's future, they've succeeded admirably for the last 800 years.
Bad investment.
"The CIA relied on intelligence based on torture in prisons in Uzbekistan, a place where widespread torture practices include raping suspects with broken bottles and boiling them alive, says a former British ambassador to the central Asian country.
Craig Murray, the rector of the University of Dundee in Scotland and until 2004 the UK's ambassador to Uzbekistan, said the CIA not only relied on confessions gleaned through extreme torture, it sent terror war suspects to Uzbekistan as part of its extraordinary rendition program."
http://rawstory.com/2009/11/ambassador-cia-people-tortured/
This is fucking despicable, no U.S. company should ever be allowed to do business with a country which has such deplorable moral standards. Our "allies"?????? Please, this is simply an example of a resource-rich country using that to do whatever the fuck they want because they know that other countries' greed won't allow them to stop going after their resources at any cost. Please pull this article off this site for implying that anyone should be looking at investing in this godforesaken country, or at least put a disclaimer before this article.....This is sick
I understand how you feel but we need to talk about these things, make people aware of what's going on, not to ask that this article be pulled and not make things magically disappear.
I agree, and don't want this pulled whatsoever, rather a disclaimer since this article has none about the human side of this topic
Thanks for making that point, @lsbumblebee . I'm afraid the Investor Class isn't all that concerned about boiling people alive, unless it threatens the stability of the regime protecting their investments.
My god, it is finally getting out. This is the driving factor behind the US policy in Afghanistan and the Muddle East. Z. Brzezinski, Obama's main man on foreign policy, outlined the strategic importance of Caspian-Mediterranean Oil Exports in his 1997 book The Grand Chessboard. http://sandiego.indymedia.org/media/2006/10/119973.pdf Check out map on page 146 of the book (154 of PDF). The reason, as outlined in the book, for our presence in Afghanistan is the destabilization of China via securitization of Turkmenistan/Uzbekistan oilfields. The book is a short read and VERY insightful. Here's a primer on ZBIG and the creation of Al-Qaeda. http://www.youtube.com/watch?v=lzRSzYZg22M
didn't enron secure the development rights, when Bush was governor of texas.? I wonder who owns them now?
Let' try this again. Z. Brzezinski,Obama's main foreign policy advisor, outlined the motivation for US involvement in the Muddle East. Control of the Caspian-Mediterranean Oilfields. Check out the map on page 146 (page 154 of the PDF) of his 1997 book The Grand Chessboard. http://sandiego.indymedia.org/media/2006/10/119973.pdf
The book is a VERY interesting read. Uzbekistan/Turkmenistan control by the US with the covert remediation of China's access to energy sources is the real reason. Read the book. Here is a nice primer on ZBIG and his coordination with the Mujahideen.
http://www.youtube.com/watch?v=9V-bxx7OyZ0&feature=related
http://www.youtube.com/watch?v=gh1GwDUx1Fc&feature=related
Zerohedge is a globalist front.
China will probably sign an exclusive agreement with them next week
Dominant power? Kazakhstan had them beat at least for the last 5 years. Medved's first trip was to see old man Nazarbayev.
The Door to Hell is located in Uzbekistan. Insane amounts of Natural Gas indeed:
http://englishrussia.com/?p=1830
the difference between us and the immoral regimes we oppose decreases year by year because too many of our leaders (and citizens) believe the ends justifies the means...when in fact there are no ends...just endless means
those responsible for extraordinary rendition to countries that torture have committed war crimes
and yes the wars in iraq, afghanistan and others to come will likely be about strategic resources, such as oil
my favorite place of vacation!
Not exactly breaking news.... this has been ongoing since the late 1980's.
Here is a good summary and grouping of maps showing what's going on in central asia vis a vis spheres of influence, pipelines and strategic energy assets.
http://positivity.wordpress.com/2009/04/21/energy-pipelines-in-eurasia-m...
Remember that the German intelligence service started the Kosovo war for the same pipeline route as the reason we entered Afghanistan's neighbors as soon as possible.
Erdogan and his allies blocked the 4ID from entering Iraq to prevent Kurdish control of the proposed pipelines favored by Chalabi's puppetmasters,
That the recent "collapse of cultural influence" of Turkey's military establishment as a overseeing political entity has to do with melding of Turkey's Islamists and Ataturk patriots desires to control pipelines and skim the cream.
The Orange Revolution was funded by Western energy firms and intelligence agencies through Soros' NGOs... meanwhile Soros led consortium needed access to Ukraine's southern route to bypass Russia to provide gas to western Balkans, north italy and Switzerland.
There is no moral factors here... there are no moral high ground, liberals (small L) who believe in moral equivalency always try to take the high moral ground, even though they don't believe in it. Any American who has a pension fund with investments in North American or Western European energy conglomerates have benefited from the brutal regime in Turkmenistan under Saparmurat Niyazov ( Turkmenbashi ), from the near collapse of eastern Ukraine, the civil chaos in Romania, the repeat Bay of Pigs like fiasco in Georgia, and the interference in the election processes in Kosova, Ukraine, Romania, Iraq and a few other areas of central Asia and periphery.
And Chechnya is a "internal civil disturbance" according to the vast majority of US Congressmen, just like Obama called Nepal's occupation and population replacement a "difference of opinion" in today's news conference.
Don't understand why someone would quote a PR-artist Craig Murray, who is using Uzbekistan to raise his self importance. Here is a story on old man:
The squalid truth about Our Man in Uzbekistan and his belly dancer lover
By BARBARA DAVIES.
Almost three years have passed since Her Majesty's Ambassador to Uzbekistan found Nadira Alieva bellydancing in a Tashkent nightclub, slipped $20 down the back of her embroidered knickers and gave her his number.
That scandalous affair left Craig Murray's 20-year marriage - and his high-flying diplomatic career - in tatters.
But against all the odds, the 49-year-old father-of-two and the 26-year-old he once paid to be his mistress are still together.
Continued.....
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article...
I saw the Craig Murray video some time ago, and thought there was something a bit off about him. He smiles/chuckles as he's telling stories about torture. The story about a woman from Uzbekistan who married a Brit and traveled to the Soviet Union with expiring Uzbekistan papers and was arrested didn't add up, either.
After I saw it, I didn't know what to believe.
Funny ass shit.
174 out of 180 in the list of corrupt countries is wait for it... Uzbekistan.
http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi...
As for above comments re Craig Murray he is a Brit in public life with strong morals, I applaud him, no attention seeking is he, just getting out the truth about an appalling regime.
If you want to invest join the queue of kelptocratic oligarchs for the former cccp and their kgb friends, be my guest ha ha.