Gas Exporting Uzbekistan Transforms into an Importer Nation
Facing a Tight Squeeze: Uzbekistan's Gas Woes Squeeze State Finances
In a recent twist, Uzbekistan's gas supplies to China took a nosedive, leaving a dent in the nation's coffers, as per a report published on UzDaily.uz on March 28, 2024. The stumble in exports resulted in a steep drop in income, from a lucrative $38.77 million in January to a more modest $18.6 million in February, according to numbers released by China's General Customs Administration. Beating last year's dismal earnings in February, when no gas export revenue was recorded, the figures were still disappointing.
However, a different story unfolded in Uzbekistan's States Statistical Agency reports, which cited gas export earnings of $21 million in January and a mere $5.7 million in February. Uzbek officials attributed the discrepancy to China's practice of including revenue from the transit of Turkmen gas via Uzbekistan in the totals, as reported by Gazeta.uz. Nevertheless, this explanation fails to reconcile the numbers.
Historically, Uzbekistan has leaned heavily on gas exports as a primary source of state revenue. But for the first time in its post-Soviet history, the country found itself on the importing side of the gas equation in 2023. Last year, Uzbek officials inked a two-year deal to import up to 9 million cubic meters of Russian gas daily, leading to an import-export deficit of about $165 million in 2023.
Uzbekistan's natural gas troubles can be traced back to numerous factors, including heightened imports from Russia and Turkmenistan, totaling approximately $1.67 billion, implying a surging domestic demand for gas or insufficient domestic production to meet local needs [4]. Strained energy relations, inadequate gas production and distribution infrastructure, economic and trade dependencies, and a struggling trade balance, particularly the high expenses of imported gas, are all contributing components to the nation's natural gas import-export predicament.
[4] Uzbekistan's Natural Gas Import-Export Deficit: Factors and Implications, Central Asian Insights, February 1, 2024.
The historical reliance on gas exports for state revenue in Uzbekistan, combined with the surge in gas imports from Russia and Turkmenistan, has led to a significant deficit in the oil-and-gas industry, impacting the nation's finance sector. This situation, as highlighted in the Central Asian Insights report published on February 1, 2024, is further exacerbated by strained energy relations, inadequate infrastructure, and a struggling trade balance that includes high expenses for imported gas.
