Translated material
trumpet call
Vladimir Putin agreed in Tashkent on the construction of another gas pipeline in Central Asia
Moscow is demonstrating its readiness to defend its gas interests in Central Asia using proven means. Prime Minister Vladimir Putin and Gazprom head Alexei Miller are returning from Tashkent with preliminary agreements on the purchase of Uzbek gas using a price formula tied to world oil prices, and plans to build another gas pipeline through Uzbekistan to transport Turkmen gas to Russia. This is an adequate, from the point of view of gas diplomacy, response to the recent agreement between Ashgabat and Beijing to increase supplies of Central Asian “blue fuel” to China , as well as to the regular attempts of the West to bypass Turkmen gas bypassing Russia.Now almost all Turkmen, Uzbek and Kazakh gas that can be exported is purchased by Gazprom. However, Tashkent, Astana and especially Ashgabat constantly talk about the desire to diversify their clientele. Projects for the construction of the Trans-Afghan (to Pakistan and India) and Trans-Caspian (to Europe through Azerbaijan, Georgia and Turkey) gas pipelines have been discussed for many years. But the Chinese have advanced the furthest , having received the right, under the terms of a PSA, to develop a group of small Turkmen deposits on the right bank of the Amu Darya. And last week, President of Turkmenistan Gurbanguly Berdimuhamedov and Chinese leader Hu Jintao signed an agreement providing for the revision of plans for the purchase of Turkmen gas by China from 30 to 40 billion cubic meters. Russia and Gazprom cannot like these trends, since the projected gas production volumes at new Turkmen fields do not yet guarantee the filling of the pipeline to the Celestial Empire. This means that Beijing and Moscow will ultimately lay claim to the same volumes of gas.
Gazprom, as you know, in March agreed to a unified proposal from Central Asian countries to pay for gas starting next year at European prices (work on agreeing on the details of future contracts began recently). “It is extremely important that our specialists in the field of gas trading managed to reach a single gas price formula,” Vladimir Putin said after negotiations with Uzbek President Islam Karimov. -- The price formula will change regularly in accordance with the components - gasoline and heating oil, and they depend on world prices for crude oil. This will be a European price formula. It was not an easy job due to the fact that there were a lot of technical details - how to evaluate transit, storage, Gazprom's margin. And I am pleased to report that almost all the issues have been agreed upon.”
The Kremlin and the White House have learned well that it is necessary to respond symmetrically to the activity of competitors: a gas pipeline project bypassing Russia, be it a half-empty pipe to China or a virtual Trans-Caspian Sea , must be contrasted with its own transportation option (via Russia), even if it looks just as crude. This thesis is confirmed by the appearance in recent years on the geopolitical map of such stable project pairs as Nabucco and South Stream, the Trans-Caspian and Pre-Caspian gas pipelines . This also includes the route from Turkmenistan through Uzbekistan and Kazakhstan to China with a new-old opponent in the form of the construction of another line along the Soviet “Central Asia - Center” system (what Putin and Karimov agreed on yesterday). All of these projects, as one, suffer from a common illness: they are focused on Caspian, primarily Turkmen, gas, which, even according to the most fantastically favorable forecasts, will not be enough for everyone.
According to Putin, “an agreement was also reached to begin practical joint work on the construction of a new gas pipeline system on the territory of Uzbekistan in order to ensure the growing export potential of Turkmenistan and Uzbekistan itself: “We see that the possibilities of such a partnership are increasing. We have a common interest in implementing this project.” “I hope that in the near future we will witness the signing of this document,” he explained later, without disclosing any details. Gazprom announced that the new project will be implemented on the terms of a joint venture. Most likely, the partner will be the state-owned Uzbekneftegaz, with whose head Ulugbek Nazarov, in particular, Alexey Miller met. For some reason, the head of Gazprom this time was not allowed directly to the Putin-Karimov negotiations (although Mr. Miller is often involved in high-level conversations), and only took part in the meeting of the Russian prime minister with his Uzbek colleague Shavkat Mirziyoyev.
From the words of Islam Karimov, one could understand that we are talking about the construction of a new line with a capacity of 26-30 billion cubic meters along the “Central Asia - Center” (CAC) system that has existed since Soviet times. Moreover, mainly for the transportation of additional volumes of Turkmen gas towards Russia, if any (there was such a reservation in the speech of the Uzbek leader). According to him, the specific parameters of the “new pipe” will depend on the exact plans of the states interested in laying it. First of all, from Ashgabat’s ability to produce additional volumes of gas for sale to Gazprom. So far, neither Turkmenistan nor the Russian concern have demonstrated anything other than general words.
Mr. Karimov himself assured that Uzbekistan was in favor of the construction of a new transit gas pipeline with both hands, although under the late President of Turkmenistan Saparmurat Niyazov no one seriously discussed this idea due to poorly concealed hostility between the heads of neighboring states. “Somewhere there was an opinion that the transportation of hydrocarbons and gas from the territory of Central Asia, that is, Turkmenistan and Uzbekistan, faces certain problems. This issue includes a lot of far-fetched things and is being created in the interests of those circles and centers that want to create a stir and, perhaps, use this for certain strategic purposes to push for new gas transportation projects,” said Mr. Karimov. “The total capacity of pipelines on the territory of Uzbekistan is about 54 billion cubic meters (SAC and Bukhara-Ural, often referred to as SAC-2. - Ed. ), he recalled. “The question of how these pipelines will be maintained if Turkmenistan’s supply capacity increases sharply is now being discussed.” And just in case, he once again denied rumors about Tashkent’s supposedly negative position: “There have been some conversations and speculations that Uzbekistan is against this pipeline passing through the territory of our republic. I must unequivocally assure that we are committed to cooperation and are ready to provide our territory. We are interested in this both commercially and based on the alliance obligations that we have with Russia.”
To top it off, the President of Uzbekistan expressed hope that his statement “to a certain extent will be a good impetus for Turkmenistan” and promised that “all volumes of gas that it is ready to supply to the north will be realized.” “Uzbekistan has never stood on this path, has not created and will not create any problems,” Karimov emphasized.
Russia has a strategic agreement with Turkmenistan until 2028 on gas purchases, which stipulates that this year supplies should have reached 70-80 billion cubic meters. But, as in the past, they are unlikely to exceed 42-44 billion cubic meters. The existing gas pipeline system can carry so much Turkmen gas, since about 12 billion cubic meters of Uzbek gas are transported through them to Russia. Moreover, as production in Uzbekistan grows through the efforts of the same LUKOIL, which has already launched one new field and is investing in the development of two more (it is expected that at the project level the Russian oil company will be able to provide an additional 12 billion cubic meters), the question of displacement from pipes of Turkmen volumes. At the same time, for investments in the construction of a new line through Uzbekistan, Kazakhstan and Russia to pay off, we need long-term guarantees of loading at least 26 billion, and preferably 30-33 billion cubic meters. In theory, Turkmenistan can provide them, but until now Ashgabat has stubbornly refused to disclose reserve audit data that would confirm the country’s ability to increase gas production.
Gazprom has long declared its readiness to invest in the expansion of the SAC (several years ago, both Vladimir Putin and Alexey Miller said that the project requires approximately $2 billion in investments, now estimates will obviously be much higher), but in the absence of guarantees the question is actually didn't move. The same thing happened with another project to transport Turkmen gas - the Caspian gas pipeline (along the seashore to Kazakhstan and further to Russia), which Mr. Niyazov cherished in order to increase exports bypassing Uzbekistan. The Caspian Sea, as we know, got off the ground last spring when the presidents of Russia, Turkmenistan and Kazakhstan signed a declaration on the construction of this pipeline in the city of Turkmenbashi. This was Russia’s diplomatic response to the excessive activity of emissaries from Washington and Brussels, who tried to convince the new Turkmen leader Gurbanguly Berdimuhamedov to support the Trans-Caspian gas pipeline (under the sea to Azerbaijan and further through Georgia and Turkey to Europe). And in December 2008, when the West intensified the “seduction” of Turkmenistan, Putin and Nazarbayev managed to persuade Mr. Berdymukhamedov by telephone to agree on the signing of an intergovernmental document on the Caspian project. Since then, work around this project has again died down, since there are no ready resources to load the gas pipeline. For Ashgabat's claims about gigantic reserves on the Caspian shelf to be confirmed, many years of geological exploration work and billions of investments in the development of reserves are required. Currently, practically nothing has been done in this direction.
As a resource base for filling its pipeline, China has only a group of small fields on the right bank of the Amu Darya, the production of which, even according to the most daring forecasts, will not exceed 13 billion cubic meters (this is clearly not enough to fill a 40 billion pipeline). This means that in order to provide the new gas pipeline with raw materials, it will be necessary to find reserves from other fields in the country or organize an auction between the Chinese state corporation CNPC and Gazprom for the volumes of gas produced. It is not surprising that the latest political agreements between Turkmenistan and China to increase the capacity of the Asian gas pipeline from 30 to 40 billion cubic meters (although no one started its construction, despite numerous ceremonies, in Turkmenistan, Uzbekistan and Kazakhstan) forced Moscow to speed up negotiations on the development of the system SAC - just to demonstrate a ready-made alternative to the Chinese proposal. Together with “European pricing” for purchased Central Asian gas, the prospects for cooperation with Gazprom become much more attractive. Especially considering that the Russian concern demonstrates its readiness to give up excess profits (a significant part of which, by the way, ends up in intermediary structures such as RosUkrEnergo) when reselling Turkmen, Uzbek and Kazakh gas, just to maintain control over gas flows in Central Asia.