Kazakhstan Chamber of Commerce in the USA

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Central Asia’s energy rush

Posted on August 10, 2014 by KazCham

Business Intelligence from Colibri Law Firm: Issue #91

Central Asia is rapidly emerging as the key playing field in the contest to access energy resources and the leverage they offer. Central Asian countries have adopted a multi-vector approach in their energy policies. They are searching not only for new transit routes, but also for foreign investments that go hand in hand with the pipeline projects.

The new Great Game is played out once again in the region, only this time it is over the vast raw material deposits that are in the possession of the former Soviet Union republics, especially those situated by the Caspian Sea. The Caspian’s share of oil and gas global exports is set to rise to 9 and 11 percent, respectively, in the coming 20 years.

Uzbekistan, Tajikistan and Kyrgyzstan – the other three post-Soviet countries in Central Asia – are not yet seen as major energy players. That could change though, with new investments being considered.

Uzbekistan comes first – even before Turkmenistan — when it comes to natural gas production in Central Asia, which at more than 60 billion cubic meters (bcm) yearly.

Tajikistan and Kyrgyzstan, with no substantial raw materials deposits – though it is believed oil and gas resources in Tajikistan’s Bokhtar field are significant – rely on hydropower. They account for more than 70 percent of Central Asia’s total capacity.

The main goal of Central Asian countries is to diversify their supply chains, which to date have been heavily dependent on Russia. This explains intensive Chinese expansion into Central Asia continues in the recent years. The 2013 visit of Chinese President Xi Jinping to the Central Asian republics resulted in energy deals struck with four countries. Tens of billions of dollars’ worth of loans to Kazakhstan, Kyrgyzstan, Turkmenistan and Uzbekistan changes the regional energy landscape.

For detailed analysis, please visit http://thediplomat.com/2014/07/central-asias-energy-rush/

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