Translated material
Outpost in Central Asia
Gazprom received two licenses in Kyrgyzstan and promised to invest $300 million
On the way from Iran to Moscow, the head of Gazprom, Alexey Miller, made a stop in Bishkek to ceremoniously receive two licenses to conduct geological exploration in Kyrgyzstan. Miller announced the concern's intention to become a strategic investor and invest $300 million in the republic's economy. For a country that has only 6 billion cubic meters of reserves, these are truly Napoleonic plans. But Gazprom considers this figure to be quite reasonable, given the concern’s planned participation in the privatization of oil and gas enterprises in Kyrgyzstan, the construction of an underground gas storage facility and the creation of social infrastructure to serve the needs of the five thousandth army of Gazprom group employees that will work in the region.Gazprom's investments undoubtedly have political implications. Moscow vitally needs strong political allies in the Central Asian region, which, after the death of Turkmenbashi, has once again become an arena for the clash of interests between Russia and Western countries. And even energy-poor Kyrgyzstan can play the role of an outpost, and gas cooperation will strengthen the partnership with Bishkek more strongly than other interstate agreements.
From this point of view, it is noteworthy that yesterday the President of Kyrgyzstan Kurmanbek Bakiyev, in an interview with RIA Novosti and the Russia Today TV channel, spoke about the prospects for the withdrawal of the American Manas airbase from the territory of the republic. As you know, the base appeared in 2001 in connection with the anti-terrorist operation in Afghanistan, and the US authorities managed to achieve more than favorable financial conditions for its placement. “When the decision was made (on the location of the base - Ed. ), unfortunately, a number of such unfavorable moments for Kyrgyzstan were allowed there. We have been dealing with these issues for two years now. And I must say that the Americans have been cooperative in terms of increasing rents. That is, economically this base brings certain benefits to Kyrgyzstan today,” RIA Novosti quotes Bakiyev as saying. Now the American budget spends $17.5 million a year for renting the base.
“My position as the head of state, and the majority of our population’s attitude to this issue, is that this is still a temporary factor. We will raise the question of withdrawal. This is clear. That is, I can say that this is not of such a nature that she will be here permanently. This is not the case,” said the President of Kyrgyzstan, who will participate in the Moscow informal summit of CIS leaders tomorrow.
Gazprom's plans and financial capabilities are obviously immeasurably higher.
“In accordance with the agreement dated May 2, 2007, signed between Gazprom and the government of Kyrgyzstan on geological exploration in the south of Kyrgyzstan, we are presenting you with licenses for two fields,” Kyrgyz Prime Minister Igor Chudinov said at the event. And he added that the work is preliminary estimated at $300 million, and this means Gazprom’s serious investments in Kyrgyzstan. Mr. Miller called obtaining licenses a new stage of cooperation: “This is a serious project in terms of investment. We plan to invest up to $300 million in Kyrgyzstan, and we are confident that the results of geological exploration in the south of Kyrgyzstan will be successful and positive.”
According to preliminary estimates of the parties, it will subsequently be possible to produce about 300 million cubic meters per year from the fields given to Gazprom, which will meet the gas needs of the population of the republic. Currently, Kyrgyzstan uses 750 million cubic meters and produces only 30 million cubic meters on its own (the rest is imported from Uzbekistan and Kazakhstan). The optimism of the head of Gazprom regarding the prospects for Kyrgyz production extends even further. “I am confident that the results of geological exploration will be successful; we understand Kyrgyzstan’s desire to provide itself with its own hydrocarbon resources, as this will not only satisfy its own demands, but will also allow the government to conduct its own pricing policy,” Mr. Miller said. According to him, annually in the country gas production volumes can reach up to 750 million cubic meters. m of gas per year, although “today we are talking about 300 million cubic meters.”
At the same time, Gazprom’s participation in the privatization of Kyrgyzgaz and Kyrgyzneftegaz has not yet been finally agreed upon. And it is associated with some uncertainty in Bishkek itself (the corresponding decision to transfer these assets into private hands has not yet passed parliament). “When the (privatization ) program is adopted, then it will be possible to talk about Gazprom’s participation in privatization,” the Kyrgyz prime minister said diplomatically. Nevertheless, the parties exchanged commitment to cooperation in this area. “During the negotiations with the Prime Minister of Kyrgyzstan Igor Chudinov, we agreed that Gazprom would work on a proposal for the privatization of Kyrgyzgaz and Kyrgyzneftegaz,” said Mr. Miller. “I believe that Gazprom can act as a strategic partner in this industry.” And if the Russian monopolist does “act as a strategic partner for privatization, then it will present its investment program until 2020.”
A source at Gazprom explains that the figure is preliminary and limits the financing of all the group’s projects in Kyrgyzstan for many years to come. And one of the main things he calls is the construction of an underground gas storage facility, where the concern will be able to keep in case of force majeure (as, for example, this winter, when there was a short supply from Central Asia of about a quarter of the volumes necessary to close Ukraine’s balance sheet) part of the gas purchased from Turkmenistan and Uzbekistan.
In addition, Gazprom promises to invest in social facilities in Kyrgyzstan. According to Alexey Miller, his company “is socially responsible.” And further implementation of projects will allow increasing the number of employees (to approximately 5 thousand, including Zarubezhneftegaz, Gazprom Neft and Gazprombank). Therefore, Gazprom is considering the possibility of building holiday homes on Lake Issyk-Kul in northern Kyrgyzstan.
Geological exploration for special purposes
While Alexey Miller promised to look for gas in Kyrgyzstan, Russian Prime Minister Viktor Zubkov in Moscow found two more “promising” countries for geological exploration for Gazprom. Following the results of intergovernmental negotiations with a delegation from Moldova, he stated that the Russian side will help Chisinau to conduct exploration of Moldovan hydrocarbon reserves. “There are good opportunities to explore Moldova’s own oil and gas reserves, and Gazprom will take advantage of the invitation to visit Moldova at the end of the month and continue work on this issue,” Mr. Zubkov said. - We had a good talk on gas issues. We believe that we have developed with Moldova, like no other ( ed. ) country, very good and clear relations with supplies and transportation in the field of oil and gas.”
Then Mr. Zubkov met with Ukrainian Prime Minister Yulia Tymoshenko and also talked about the joint development of oil and gas fields. Since gas is still produced in significant volumes on Ukrainian territory (unlike Kyrgyzstan and Moldova), the scope of the Russian government’s proposals turned out to be large. “Our proposals to Ukraine include not only transit, but also joint development of hydrocarbon fields in both countries, with an equivalent exchange of assets,” said Mr. Zubkov. He did not develop the idea further, but it has long been known that the most attractive Ukrainian hydrocarbon asset for Moscow has always been a gas pipeline. But this topic is an absolute political taboo in Kyiv.
Therefore, the prospects for exchange here are approximately the same as in the search for industrial gas reserves in Moldova. It should be noted that nothing is known about them today. Industrial oil production in the country began three and a half years ago under a concession agreement with the US-registered company Redeco. Confirmed reserves in the area given to the Americans for use amount to 560 thousand tons, and production in 2006 was supposed to be 8-9 thousand tons. Alexey GRIVACHS