Why Russia is investing in oil and gas production in Uzbekistan

Alexey Gromov, Principal Director on Energy Studies, commented to Radio Sputnik (Uzbek editorial office) on the Russia's motivation to invest in oil and gas production in Uzbekistan.

VEB.RF, in a consortium with partner banks, is ready to work out financing the second stage of the project to increase hydrocarbon production in Uzbekistan, the press service of the state corporation reported. The loan is estimated at $ 650 million.

Commenting on this news, Aleksey Gromov, Director on Energy Studies at the Institute for Energy and Finance, noted that in Uzbekistan, especially on the border with Kazakhstan and Turkmenistan, there are "sufficiently significant geological structures that may be of interest for further exploration and, in the future, for discovery of good reserves, primarily, of natural gas."

"Why is it interesting for Russia to come there? Probably, this is some kind of restoration of our energy ties with the countries of Central Asia. We must honestly admit that starting from about 2005-2006, when Russia, due to various economic reasons, cooled its economic cooperation, primarily with Turkmenistan, China began to come to Russia's place as the main partner of the region's countries in the energy sector. We see how the PRC actually tightly controls the entire oil and gas industry of Turkmenistan, how significant its influence is in Kazakhstan, how it is gaining strength in Uzbekistan," Gromov said.

Russia should not lose its energy influence in the region, the expert said. Therefore, participation in geological exploration and production of oil and gas in Uzbekistan, co-financing projects is the right direction, he noted.

“You also need to understand that the economy of Uzbekistan is growing, gas consumption is increasing. Moreover, this gas, if production volumes allow, will be useful, including for future supplies to China. The region has good prospects, and it is advisable for Russia at least to be present in it to understand how its oil and gas potential is developing, where potential flows are oriented," the expert said.