Central Asia’s energy market is experiencing a rapid shake-up thanks to Ukraine’s drone campaign against Russian energy infrastructure.
Repeated Ukrainian attacks on Russian refineries have caused the Kremlin to limit exports of fuel products, including gasoline and jet fuel, to cope with deepening domestic shortages.
Beyond diversifying suppliers, both Tajik and Uzbek officials are stepping up efforts to prospect for new domestic energy reserves.
Kazakhstan and Turkmenistan are largely self-sufficient when it comes to meeting domestic demand for petroleum products.
Such a deal would shield Russian petroleum products from Ukrainian strikes, but would likely crimp earnings for the Kremlin.
Central Asia’s energy market is experiencing a rapid shake-up thanks to Ukraine’s drone campaign against Russian energy infrastructure. Russia stands to lose leverage and market share in the region over the long term as Central Asian states rush to diversify their fuel-supply options.
Repeated Ukrainian attacks on Russian refineries have caused the Kremlin to limit exports of fuel products, including gasoline and jet fuel, to cope with deepening domestic shortages. That, in turn, is prompting Central Asian states to scramble for alternate supplies to avoid a potential energy crisis in the fall and winter.
Until this year, Kyrgyzstan and Tajikistan depended on Russia for roughly 90 percent of fuel supplies. Now, Russia can no longer be relied upon as an exporter. For example, in late July, Russia agreed to deliver only about half the level needed to meet Kyrgyzstan’s demand for the rest of the year, or about 100,000 tons of petroleum products a month.
To help cover the shortfall, Bishkek has struck small supply deals with Uzbekistan and Kazakhstan, along with shipments from Belarus and China. Kyrgyz officials are also seeking additional fuel from Turkey and the EU.
In addition, the Kyrgyz government is developing a degree of fuel self-sufficiency, accelerating a project to build a refinery capable of producing about 450,000 tons of petroleum products per year, enough to meet nearly a quarter of the country’s annual demand. The refinery could become operational as early as the end of 2026.
Tajikistan in July tripled fuel imports from Turkmenistan, Uzbekistan and Kazakhstan, totaling 34,000 tons, compared to June’s figures, Reuters reported. At the same time, Russian supplies of gasoline fell by roughly half, to just over 14,000 tons. Tajik officials are negotiating with Kazakhstan and China for additional supplies. The Energy Ministry stated in early July that the country’s fuel reserves could last for about 60 days.
Uzbekistan is less dependent on Russian energy, with domestic production capable of reaching 100,000 tons of petroleum products per month, about 60 percent of the country’s needs. To cover the rest, Tashkent has been forced to diversify its suppliers, reaching deals with Georgia, Iraq, and other countries, according to a presidential press release.
An immediate challenge for Uzbek authorities is a spike in demand for jet fuel. “Due to the escalating geopolitical situation, the number of flights traversing Central Asia is rising. Specifically, the number of flights to Uzbekistan [from Russia] has increased,” the presidential statement noted, adding that domestic production is expected to increase to meet surging demand. Tashkent has emerged as a hub for Russians engaging in foreign travel amid wartime sanctions.
Like Tajikistan, Uzbek officials say the country has sufficient reserves to last two to three months. At the same time, they have sought to tamp down concerns about a potential energy crunch. “I am confident that, together with other organizations, regional authorities, and representatives of related sectors, we will get through the autumn-winter season without major setbacks,” First Deputy Energy Minister Umid Mamadaminov said in a television interview.
Beyond diversifying suppliers, both Tajik and Uzbek officials are stepping up efforts to prospect for new domestic energy reserves. Dushanbe has engaged Chinese firms to help with geological surveying while Tashkent is upgrading its capacity, including plans to establish a seismic data processing center in conjunction with a US firm, Schlumberger, also known as SLB.
Kazakhstan and Turkmenistan are largely self-sufficient when it comes to meeting domestic demand for petroleum products. Both countries are benefiting from additional export revenue earned from neighboring states.
The longer the Russian-Ukraine war drags on, the more likely the new supply arrangements in Central Asia will become cemented in place, leaving Russia with a significantly smaller market for its fuel over the long term, thus reducing much-needed revenue flowing into Kremlin coffers.
In perhaps the clearest sign of the Russian government’s present woes, Russian officials are in talks with their Kazakh counterparts on a possible deal to refine Russian oil at Kazakh refineries, Reuters reported. Such a deal would shield Russian petroleum products from Ukrainian strikes, but would likely crimp earnings for the Kremlin. Kazakh refined products would be sold domestically, as well as supplied back to Russia, according to preliminary plans.
By Eurasianet
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