Tajikistan find a game changer

By Robert M Cutler

MONTREAL - Attention to Central Asian energy is most often driven by such gigantic projects as the Turkmenistan-China pipeline or the question of doubling the volume of the oil pipeline of the Caspian Pipeline Consortium (CPC) from northwest Kazakhstan across southern Russia to the Black Sea or other such strategic projects having a trans-continental, or at least semi-continental, scale.

However, the Central Eurasian hydrocarbon energy scene is a "complex system" in the technical sense, and it is a postulate of complex systems analysis that evolution on smaller scales can have suddenly apparent effects on larger scales.

Thus events in energy development within Central Asia itself, the development of energy locally and not for export in the first instance, can have broader consequences later on. Such developments have lately been occurring in Tajikistan and Uzbekistan. The reason why they have not garnered so much attention in Western media is not only that the projects are relatively local but also that Western firms have not generally been involved.

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It is often not realized that Uzbekistan is the second-largest gas producer in the former Soviet area and 10th in the world. That is because its exports have not been very great compared to others in the region, due to Uzbekistan's larger population and hence greater domestic consumption. Annual production is roughly 60 billion cubic meters (bcm) of gas and eight million tonnes of liquids.

It is the Russian gas monopoly Gazprom's subsidiary for foreign oil and gas development, Zarubezhneftegaz, that has conducted the work in Uzbekistan, and Tajikistan motivated much of that development. Russian companies Lukoil and Rosneft are also participating in natural gas development in Uzbekistan. South Korea is one of the relatively few other foreign countries (Malaysia is another) whose firms participate in energy exploration and development in Uzbekistan, including in the region of the Aral Sea.

At the end of 2010, Uzbekistan announced its energy development program for the next five years. This calls for investment of over US$23 billion, including the development of 37 new projects largely through the national "champion" Uzbekneftegaz and in cooperation with foreign enterprises where appropriate.

It has, for example, worked with Gazprom's subsidiary to develop the Shakhpakhty block of the Ustyurt Plateau, so far producing 120 million cubic meters per year (mcm/y) with the anticipation that at least several more billion cubic meters may be found elsewhere through the dozens of wells being drilled there.

At present, nearly all of Uzbekistan's gas flows to Russia, but the country is trying to diversify its export partners, particularly in the Asia-Pacific region and with special attention to China. Thus, as from 2007, Uzbekneftegaz cooperated with the Chinese National Petroleum Corporation (CNPC) in a joint venture to build Uzbekistan's segment of the Turkmenistan-China gas pipeline that entered into service at the end of 2009.

The second stage of this pipeline is now finishing construction in order to realize the projected throughput of 40 bcm/y, including volumes transiting eastward from Turkmenistan. This second-stage construction will also feed the Gazli underground gas storage facility inside Uzbekistan for domestic consumption purposes. The infrastructure is being upgraded and additional compressor plants constructed for the purpose with Chinese assistance.

Lukoil is involved in developing the Kandym-Khauzak-Shady-Kungrad project in Uzbekistan for possible export to China via supply to CNPC. Current production is 3 bcm/y, with more production coming online by 2013 and peaking at 15 bcm/y by the middle of the decade. At present, Lukoil sells all of its gas produced in Uzbekistan to Gazprom for transshipment to third-party consumers; however, Uzbekistan plans that the gas from this project will enter the Turkmenistan-China pipeline.

One of the few destinations outside Russia for Uzbekistan's gas exports, other than China, has been Tajikistan. This is likely to change in the medium term. Last month, Gazprom announced that its exploration of Tajikistan's Sarikamysh field discovered roughly 60 billion cubic meters (bcm) of natural gas, or the equivalent of 50 years' worth of domestic consumption.

This means that sooner rather than later, Tajikistan will no longer need to be dependent on gas exports from Uzbekistan, which have been a bone of contention over payments and supply suspensions. Indeed, this was the reason behind Tajikistan's original drive to develop more hydropower, which in turn irritates Uzbekistan because the water is needed there for irrigation of cotton, a major export crop. Nevertheless, in Tajikistan, the Sangtuda-1 plant was completed with help from Russia, and Sangtuda-2 is underway.

Along with the development of the Rogun Dam for hydroelectric power, which is now possible thanks to Iran's decision to break an international embargo on sending equipment to Tajikistan to develop the ecologically sensitive area, the new gas discovery has the potential to make Tajikistan a regional exporter of energy to Central and South Asia, and even China, in the medium term.

That in turn would affect not only intra-regional but also broader strategic energy balances, exemplifying how emergence on smaller scales in a complex system affect pattern-evolution at larger scales. And Sarikamysh is unlikely to be the only gas field that Gazprom will find in Tajikistan.

Dr Robert M Cutler, educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada, he also consults privately in a variety of fields.
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