Posted on 01/21/2006 12:03:11 PM PST by Tailgunner Joe
Alexey Miller, chairman of the management of Gazprom, arrives in Uzbekistan today. He intends to reach an agreement with President Islam Karimov on Gazprom's development of the three largest natural gas deposits in Uzbekistan. If negotiations are successful, the Russian company will have a de facto monopoly on as export from Uzbekistan. All Tashkent wants in exchange is a 100-percent guarantee that Russia will help Uzbekistan suppress antigovernment demonstrations and protect it from the West. Gas First and Foremost
The main goal of Miller's visit to Tashkent today is to conciliate the latest versions of the agreement giving Gazprom the development of the three largest gas deposits in Uzbekistan, Urga, Kuanysh and the Akchalakskoe group, on a product-sharing basis. Gazprom is proposing to increase gas imports from Uzbekistan from the current 5-6 billion cu. m. to 17-18 billion cu. m. per year with the development of the deposits. The negotiations are so important to Gazprom that Miller is discussing the product-sharing agreement with the president of Uzbekistan himself.
Gazprom is already developing deposits in the same region on the Ustyurt Plateau near Kungrad and Shakhpakhty, although the projected capacity there is less than 500,000 cu. m. per year. Total Gazprom investment in the development should reach $1.2 billion.
If the agreement is signed, which Gazprom assumes may happen either at the upcoming EvrAzES (Eurasian Economic Association) summit in St. Petersburg or at the end of March, the Russian gas monopoly will be the controlling player on the Uzbek gas export market. The British Trinity Energy and a consortium of LUKOIL and Intera work on territories adjacent to Gazrom's, where they produce gas on terms close to product sharing. Uzbekneftegaz affiliates produce about 54 billion cu. m. annually, but exports are limited by the capacity of the country's and neighboring Kazakhstan's transport system and are controlled by Gazprom, which will buy up to 7 billion cu. m. in 2006 and which is the transit operator for Turkmen gas on the territory of Uzbekistan. Uzbekistan produces its own gas mainly in other regions, at the Kandymskoe deposit and the Shurtanskoe group of deposits in Bukhara and Kashkadaryin Regions, respectively, and uses it in the chemical industry or in public utilities.
With a product-sharing agreement, Gazprom will de facto monopolize gas export from Uzbekistan. Intera had had plans to produce in Uzbekistan and export gas it but, after planning to invest up to $2 billion in the Kandymskoe deposit, Enron was unsuccessful in the mid-1990s in the largest gas production project in Uzbekistan. It looks as if Uzbekistan intends to grant Gazprom the entire development of the gas deposits on Ustyurt. In addition to the product-sharing agreement on the three investment blocks, an agreement between Gazprom and Uzbekneftegaz on principle of geological exploration of all of the region's investment blocks. There are now no fewer than eight large oil and gas deposits unexplored in the Kungrad region.
By gaining Ustyurt on product-sharing terms, after more than four years of negotiations, Gazprom has partially insured itself against a possible fall in gas production in Turkmenistan. The deal looks attractive enough for Uzbekistan too. It simply does not have the funds for development or, more importantly, increasing the capacity of the Uzbek portion of the Central Asian-Center pipeline for exports.
Protocol Events
The gas agreement comes just before Karimov's visit to Russia. He will participate in the EvrAzES summit in St. Petersburg on January 25. There, the Uzbek leader is to sign a protocol on Uzbekistan's accession to the agreement on the founding of EvrAzES. That decision was in practice made last autumn, when the member states of the Central Asian Association (Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan) announced the liquidation of that organization and their intention to merge with EvrAzES. Kazakhstan, Kyrgyzstan and Tajikistan were already members, that is, the whole process was for Uzbekistan's sake.
The wandering of the Central Asian countries from one organization to another has nothing to do with economic integration. The Central Asian Association did not prove its worth and did not bring about its members' goals. EvrAzES is no more effective yet but the admission of Uzbekistan into the brotherhood of post-Soviet republics is symbolically important for both Moscow and Tashkent.
Uzbekistan spent half of last year as an international outcast after security forces cruelly put down an uprising in Andijan on May 13 as a result of which, according to independent estimates, between 700 and 1500 people died. Then Uzbekistan categorically refused to allow an independent investigation of the events in Andijan and soon after demanded the closure of American military base on its territory. China immediately supported the Karimov regime's actions, as did Russia after slight hesitation. As Western countries imposed more and more sanctions on Uzbekistan, Moscow continued cheerfully to receive Karimov.
Nonetheless, Uzbekistan's international image was so bad that Russian authorities came to the conclusion that it would be better not to be friendly with it on a one-on-one basis but within an international organization. That is why, starting last year, Tashkent was included in all regional organization in the former Soviet Union that it had not already been part of.
In this sense, EvrAzES is just a test run. Moscow's real goal is for Uzbekistan to be admitted to the Collective Security Treaty Organization as soon as possible. The Kremlin intends to turn that organization into a military and political block along the lines of NATO. The Russian leadership would very much like it if Karimov announced Uzbekistan's membership in the CSTO at the St. Petersburg summit. That would allow Moscow to put old and cherished plans into actions like opening a CSTO “antiterrorist” base at the facility vacated by the Americans in Karshi-Khanabad in Uzbekistan.
Thoughts of the Future
Membership in the CSTO is important for Karimov as well, and the symbolic membership in the EvrAzES is a step in that direction. The Uzbek leader has his own plans for the “pro-Russian NATO” and he intends to use he organization for his own purposes.
A struggle for power broke in the upper echelons of Uzbek officialdom last year. In Tashkent, there are rumors that the president is terminally ill and his inner circle is readying itself for a power grab. The long-time pillars of the Karimov regime are the Interior Ministry and the National Security Council and their heads Zakir Almatov and Rustam Inoyatov, respectively. Almatov left the political scene last year, however. Soon after his subordinates crushed the Andijan uprising, Karimov transferred the Interior Ministry's internal forces troops to the control of the National Security Council. Then Almatov left the country and was operated on in Germany for spinal cancer. Finally, in December, threatened with legal action from the German government, he returned to Tashkent and retired. The balance of security forces' power in Uzbekistan was disturbed. Analysts unanimously say that the likelihood of a coup d'etat in Uzbekistan has never been higher.
Similar concerns seem to have haunted Karimov last year, especially after the events in Andijan, which, according to one theory, were provoked by one of the opposing branches of the security services. In any case, the Uzbek president has been talking more and more since last summer of the need to set up an international rapid reaction that could suppress revolts in that and other countries.
That was the gist of the treaty of allegiance signed last October between Tashkent and Moscow. Russian essentially guaranteed Uzbekistan that it would intervene if a revolutionary situation arises on its territory and promised to put down any uprising against Karimov.
But those promises were not enough for the Uzbek authorities. Therefore, as Kommersant has learned, the Uzbek authorities have developed a project to set up international antirevolutionary punitive forces in the former Soviet Union, for which a military alliance such as the CSTO could become an umbrella organization. Thus, Uzbekistan will enter the CSTO with a package of proposals to improve the organization, including proposals to set up intelligence and counterintelligence bodies within it and to develop ways for it to guarantee the domestic security of the Central Asian states.
Russia is leery of giving the organization a policing role so far. Its ambition is to make it the Eurasian answer to NATO and not a watchdog for the Central Asian states. But Moscow's position may change as the St. Petersburg summit nears. As Tashkent has already understood, the way to the Kremlin's heart is through Gazprom.
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