Translated material
Unpredictability of relationships
Uzbekistan is not ready for long-term contracts with Russia for gas supply and transit
Following the 12th meeting of the intergovernmental commission on cooperation between Russia and Uzbekistan, its co-chairman, Russian Deputy Prime Minister Sergei Ivanov (pictured), announced his desire to switch to long-term contracts in the field of gas procurement and transit. However, as Interfax reports, at the insistence of the Uzbek side, no instructions were made after discussing this issue, and the item was completely excluded from the final protocol.Gazprom's Central Asian partners, including Uzbekistan, continue to avoid taking on long-term obligations. On the one hand, from both an economic and political point of view, they are quite satisfied with the system of annual bargaining on the terms of supplies and transit. The habit of haggling is not hindered even by the fact that since last year the price of Uzbek gas purchased by Gazprom has been calculated according to a formula tied to European contracts. On the other hand, the Central Asian countries do not have a clear understanding of what will happen to their production capabilities in 20-30 years. And this is a fundamental obstacle to long-term contracts.
In 2009, 15.4 billion cubic meters of Uzbek gas were purchased into Gazprom’s portfolio. About 12 billion cubic meters came from Turkmenistan, approximately 10 billion cubic meters from Kazakhstan. Stable contractual relations have been established specifically for Kazakh gas. Gazprom Export structures buy fuel from the joint venture Kazrosgaz with Kazmunaigas. The fuel undergoes preliminary processing at Gazprom's Orenburg gas processing plant. Less clear agreements were signed with Turkmengaz and Uzbekneftegaz, requiring annual approval of commercial terms.
For 2010, Gazprom contracted 15.5 billion cubic meters of Uzbek gas, including up to 6.5 billion cubic meters from LUKOIL, which is increasing gas production within the framework of two projects implemented on the basis of a PSA. The design capacity of Lukoil's fields is about 12 billion cubic meters by 2013. Mr. Ivanov estimated the oil company's investments in Uzbekistan for 2010 at $480 million.
As Mr. Ivanov said yesterday, Gazprom is in constant negotiations with Uzbekistan. “We are talking about moving to long-term contracts. This increases the predictability of relationships and reduces the opportunity for intermediaries and swindlers to play on this. Here it is no longer possible to wedge in, play or deceive us. Russia stands for the long-term nature of relations,” says the Deputy Prime Minister.
The Uzbek side has not officially commented on its position on this matter, especially since no negotiations with Gazprom regarding the transition to long-term relations are planned yet.
But it should be noted that in 2010 the five-year agreement between Gazprom and Uztransgaz on the transit of Turkmen gas expires. And by December, the parties must agree on a new agreement, taking into account the fact that the volume of purchases of Turkmen gas by Russia has decreased significantly since 2009 (in 2010 it is planned to purchase 10-11 billion cubic meters of gas compared to 42 billion cubic meters in 2008). In addition, in two years the ten-year agreement between Gazprom and Uzbekneftegaz on a strategic partnership, on the basis of which Uzbek gas will be supplied to the portfolio of the Russian concern, will expire. And the concern may well link its extension to the transition to more mandatory forms of long-term interaction.