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central asia's escalating energy crisis and its geopolitical implications

Central Asia's Escalating Energy Crisis and its Geopolitical Implications

Author: Meray Ozat

Aug 9, 2023

Image source: Shutterstock

As energy demands increase, Central Asian countries have been grappling with frequent energy crises. The winter of 2022-2023 hit the region particularly hard because of the continuous crisis, creating risks of heating and electricity insufficiency and impacting both the economy and the lives of citizens. Despite being rich in natural resources and major gas exporters, most Central Asian countries have been compelled to halt their gas exports due to significant shortages and escalating domestic demand. This energy shortage threatens the region with winter heating problems, with Uzbekistan and Kyrgyzstan facing particularly high risks among Central Asian nations. Although the two countries have been actively finding solutions through seeking foreign assistance from countries like Russia and China, their support cannot fully resolve the crisis and export obligations. 

Uzbekistan faces gas insufficiency with increasing domestic demand. Analysts say that purchasing 6 billion cubic meters of gas from Russia can resolve the domestic energy crisis. On June 19, Uzbekistan and Russia signed a gas agreement to supply Russian gas to Uzbekistan through Kazakhstan starting from October 2023. Uzbekistan will buy 2.8 billion cubic meters of natural gas from Russia’s Gazprom through the Central Asia-Center (CAC) pipeline, with an estimated daily transportation of 9 million cubic meters. Part of the agreement has already come into operation with a deal between QazaqGas and Russian Gazprom, which has already been transporting gas to Uzbek consumers since May 2023.

However, apart from the rising domestic demand, Uzbekistan also has a pre-existing gas deal with China that requires an annual delivery of 10 billion cubic meters of gas to China. Since the agreement's signing, Uzbekistan has struggled to fulfill the full amount due to its unstable energy resources. During the current energy crisis, this agreement has added further pressure, exacerbating the energy crisis. Therefore, the additional gas to be exported from Russia can only temporarily resolve Uzbekistan’s domestic crisis, still leaving Uzbekistan liable for its gas export obligations to China. 

In the first quarter of 2023, Uzbekistan suspended its gas exports due to the domestic gas shortage. After the temporary break, gas exports to China resumed starting in April. Over the subsequent months, the Uzbek side gradually increased the gas supply from $40.47 million in April to $85.27 million in June, aiming to compensate for the previously undelivered amount. Despite these efforts, the Head of the UzTransGaz, Behzot Narmatov, revealed that Uzbekistan might consider fully abandoning its gas export to China by 2025-2026 due to the surging domestic demand. Although the specifics of the plan remain uncertain, such a decision could lead to significant economic losses for Uzbekistan, undermine its credibility as an exporter, and impair trade relations with China. 

Another country in Central Asia that faces a huge energy risk is Kyrgyzstan with the possibility of insufficient electricity in the upcoming winter. The country has long struggled with electricity supply issues, with its hydropower production consistently falling short of meeting domestic demand. The situation further worsened this year with the shrinking of production at the Kyrgyz hydropower plant at Toktogul reservoir that generates the majority of the Kyrgyz electricity. Energy consumption in Kyrgyzstan reached 17 billion kWh in 2023, exceeding domestic production of only 14-15 billion kWh annually. As domestic hydropower production continues to decline, domestic energy risk escalates with possible power rationing at any time during the winter. 

Witnessing the unavoidable risk, Kyrgyzstan President Sadyr Japarov declared a state of emergency in the energy sector in July 2023 for the period between August 1, 2023, and December 31, 2026. This measure reflects the gravity of the situation and underscores the urgency to address the looming electricity shortage. Kyrgyzstan must now proactively seek sustainable solutions to meet its energy demands and secure a stable power supply for its citizens during the winter months ahead.

Kyrgyzstan has taken some preventative measures by importing electricity from Kazakhstan, Uzbekistan, and Turkmenistan. Kyrgyzstan Energy Minister Taalaybek Ibraev expressed, however, that covering deficits through neighboring countries is not a sustainable solution. In addition, Kyrgyzstan has also turned to China for investment and assistance in building energy infrastructure. On July 27, Kyrgyzstan and China officially signed a memorandum of understanding and investment agreement on building the Kazarman hydropower plant project worth $2.4-$3 billion. The Chairman of the Kyrgyzstan cabinet of ministers, Akylbek Japarov described this project as “the largest in the history of Kyrgyzstan.” However, the construction of the project is expected to start only in 2024 and finish by 2030. Therefore, the Kazarman project cannot resolve the imminent crisis facing Kyrgyzstan despite generating future opportunities. 

The energy crisis in Uzbekistan and Kyrgyzstan, along with the measures they have taken to address the risks, also reveals notable geopolitical implications. While Central Asian states are facing an impending crisis, Russia is actively seeking opportunities in the region. Russian ambition in the region started before the Uzbek gas crisis, discussing the formation of an alliance with Kazakhstan and Uzbekistan, known as Gas troika, back in November 2022. The Central Asian market presents a significant opportunity for Russia to make up the revenues from its undelivered gas to the European market. Uzbekistan's gas deal with Russia can be marked as an important step for the reintroduction of Russian influence in the Central Asian market.

Central Asian states’ move to seek assistance from external powers, however, might raise concerns among the international community. The establishment of an energy alliance between Central Asia and Russia can enable Russia to rebuild its influence in the region and contribute to Central Asia’s ambiguous foreign policy stance, which could potentially dampen Western interests in the region. The sanctioning risk should not be discounted; it already threatens the Central Asian economy due to its proximity to Russia.

Chinese involvement in the region on its renewable energy initiatives, in turn, presents positive opportunities that can contribute to the sustainable energy development of the region. Meanwhile, Chinese support also serves the purpose of counterbalancing Russian dominance in the region and reducing Central Asia’s energy dependence on Russia. However, while seeking to mitigate Russian influence, Central Asia must be cautious of inadvertently inviting Chinese influence as a potential next external threat, shifting Central Asia from the Russian backyard to the Chinese backyard. 

The recurring energy crisis seems to create not only domestic and regional problems but also geopolitical risks. Despite implementing measures like reducing exports and seeking external support to protect resource reserves and address the approaching energy crisis, these actions can be ineffective, potentially leading to political risks and economic costs. With their vulnerability to energy risks, underdeveloped infrastructure, and unstable energy reserves, addressing the current situation and taking measures to mitigate future energy risks should be a priority for the region. It is time for Central Asian countries to identify the underlying reasons behind the crisis and work together to find a collective resolution. 


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