Gazprom shakes up Krygyz LNG supply chain

Gazprom completed an agreement last month to purchase Kyrgyzstan’s state gas company Krygyzgaz for $1, after Russia wrote off a large portion of Kyrgyz debt in return and Gazprom pledged to invest $570 million in repairing and modernizing gas infrastructure. This will also alleviate some stress on the Krygyzstan-Uzbekistan relationship, from which Kyrygzstan draws about 98% of its gas. Gazprom’s role in this will apparently be to sell Uzbek gas to a subsidiary in Kyrgyzstan, at a cheaper price. Supplies are currently coming in at $290 per 1,000 cubic meters.

Kyrgyzstan does not possess large reserves of gas of its own, and thus is forced to import most of it. In 1990, Kirghizia, which roughly corresponds to current borders, consumed about 2 billion cubic meters of gas, and consumption has remained roughly at about 700 million cubic meters or slightly lower. Gazprom is intending to exploit the Shkhpakhty and the Ustyurt Plateau structure to supply the Soviet era Central Asia-Tsentr pipeline network.

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News Briefs:

  • President of Kazakhstan Nursultan Nazarbayev signed a law that would limit the sale of alcoholic beverages on June 18. Any beverage stronger than 30% alcohol must not be sold anywhere except bars and restaurants, and also limits their sale at gas stations, educational, and sports facilities. Kazakhstan leads among Central Asian countries (and the world) for alcohol consumption, which is around 11 liters of vodka per person.
  • Uzbekistan has announced it will take part in the first Central Asian Gas Forum, which will take place from June 25 to 26 in Almaty, Kazakhstan. Among the topics that will be discussed are areas of production, processing, and distribution of gas in Kazakhstan, Turkmenistan, Uzbekistan, and Kyrgyzstan. Of particular note are topics related to Central Asia’s European gas markets and demand in China. Representatives from Azerbaijan, Iran, China, Russia, India, and the EU will be in attendance.
  • Kazakhstan is the most courted country in Central Asia for foreign investment from Russia and China. With the signing of the Eurasian Economic Union Treaty on May 29 in Astana, trade is likely to increase with Union partners such as Russia and Belarus, as well with trial members like Armenia and Kyrgyzstan. However, Kazakhstan’s current trade levels with Russia are quite low, at only about 9% as opposed to 40% with the EU.
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