Will Gazprom save Kyrgyzstan from severe winter?

Kyrgyzstan Materials 23 September 2014 19:21 (UTC +04:00)

Baku, Azerbaijan, Sept. 23

By Aygun Badalova - Trend:

On the threshold of the winter season Kyrgyzstan's problem with gas supplies stands on the government's agenda.

Halting gas supplies to Kyrgyzstan's south region by Uzbekistan in spring this year has made the country's energy crisis much more severe. Kyrgyz people's hope for the warm winter is now in Russia's, in particular Gazprom hands, which earlier this year bought 100 percent of KyrgyzGaz's shares.

Gazprom Management Committee Chairman Alexey Miller's statement says that the company's Kyrgyz market entry is a guarantee of regular gas supplies for the country's consumers. However, earlier Kyrgyzstan's prime Minister Joomart Otorbaev warned that the forthcoming autumn-winter season will be difficult, and called population to save electricity, buy coal and other alternative types of fuel.

Russian expert on Central Asia, Azhdar Kurtov does not believe that Kyrgyzstan's deal with Gazprom will solve the country's gas problems.

"Kyrgyzstan does not have natural gas reserves. Gas is being produced there, but in small volumes. And thus far no large field has been discovered," Kurtov told Trend on September 23.

"Gazprom largely invests in Kyrgyzstan's energy sector, but so far there are no visible effects," he said.

He also mentioned that Kyrgyzstan and Uzbekistan often face disputes, and political tensions complicate the establishment of economic cooperation between the countries.

"Traditionally Kyrgyzstan was supplied with gas from Uzbekistan, for quite an expensive price. The sides had a chance to resolve this, however all plans remained on paper," the expert said.

Uzbekistan had frequently cut off gas supply to Kyrgyzstan because the country has rarely been able to pay off its gas bills on time. On April 14, Uzbekistan cut off gas supply to the south of Kyrgyzstan because of termination of the contract between Uztransgaz and KyrgyzGas.

Negotiations with the Uzbek side to resume deliveries has not given tany results, despite all the efforts, including the ones from and Kyrgyzstan's Russian partners.

Kurtov believes that Gazprom's agreement with Kyrgyzstan probably has political context, rather than economic.

"Gazprom does not have clear economic reasons and the chances to get significant commercial profits from agreement," the expert said.

Kyrgyzstan, according to the expert, with no financial resources and technological opportunities, has always been interested in finding foreign investor.

China, Kurtov believes, could be such an investor, however the country doesn't have enough interest in spending a lot of money on developing of Kyrgyz national infrastructure.

Gazprom's promise to supply for low prices does not seem to be fulfilled, the expert believes.

"The agreement with Gazprom will not solve Kyrgyzstan's problems. And until the conditions for the people to stay and work in the country will not be created, no project, even a large-scale project, wouldn't solve Kyrgyzstan's problems," Kurtov said.

In 2013, Gazprom acquired all of the gas infrastructure within Kyrgyzstan. Gazprom as well as its subsidiaries have the exclusive right to import natural gas to the country and are protected against expropriation and nationalization in Kyrgyzstan.

Meanwhile, Gazprom has to pay off KyrgyzGas's $40 million debt and guaranteed to invest over 20 billion rubles ($612.8 million) in modernization and reconstruction of Kyrgyzgas's gas infrastructure within five years.