US plans to develop gas and oil fields in Uzbekistan will not bring significant profit. The maximum that Americans can count on is several tens of millions of dollars for gas, experts say. With oil, the prospects are even less.

Aiming at Central Asia

The US Geological Survey and the State Committee of Uzbekistan on Geology and Mineral Resources will search for shale oil and gas deposits in the Central Asian country. This was reported by the Dunyo (Mir) news agency under the Ministry of Foreign Affairs of Uzbekistan.

If successful, Washington may gain access to the development of Uzbekistan's raw materials reserves. Extraction of energy resources will be carried out according to American technologies. The cost of the US and Uzbekistan oil and gas project is estimated at $2.3 million.

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The main goal of the US expansion

Washington has been eyeing the energy market of the Central Asian countries for several years now. In 2020, the United States launched a separate program, Energy for Central Asia, for closer cooperation with the states of the region. The project was developed by the Agency for International Development (USAID), the total investments of the States amounted to $38.9 million. And already in 2021, the Americans, together with Saudi Arabia, signed an agreement with Uzbekistan on the development of hydrogen energy in the country.

Stanislav Mitrakhovich, a senior researcher at the Financial University under the Government of Russia, doubted the real benefit of the United States from large-scale energy projects in Central Asia, in particular, Uzbekistan.

“The United States will have to spend millions of dollars to build gas backup facilities near the stations in case of possible interruptions. If the Americans do not fork out, the Uzbek population will expect an increase in electricity tariffs,” Mitrakhovich said.

He added that the only real source of profit for the United States would be the joint development of Uzbek gas fields. However, it will be extremely difficult for the Americans to push Russia and China from leading positions in the local energy market.

“US investment in exploration is unlikely to be more than $10 million. This is for chickens to laugh at. Half of the US investments will probably go into the pockets of the "right" people in the local government. The Uzbeks will blackmail: Washington, they say, increase injections, otherwise we will end up in the hands of Moscow or Beijing, ”the analyst suggested.

According to Igor Yushkov, an expert at the National Energy Security Fund, the development of gas fields will allow the United States to "pull off" part of China's proceeds and receive tens of millions of dollars from raw material exports to Asia.

“The existing three lines of the Central Asian pipeline are still not operating at full capacity: 42-43 billion cubic meters per year out of the maximum 55 billion. Before the opening of the Winter Olympics, Turkmenistan and China were actively discussing the construction of the fourth line, and this is another 30 billion cubic meters. The whole question is whether Beijing wants to pay Washington for Uzbek gas,” the expert explained.

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US gas miscalculation

Uzbekistan is one of the largest gas producers in Central Asia - more only in Turkmenistan. However, almost the entire natural resource goes to meet the needs of the growing population of the country. As a result, Uzbekistan's export gas prospects leave much to be desired, Yushkov stressed in an interview.

“Uzbekistan's gas reserves account for 0.4% of the world's total — approximately 800 billion cubic meters. Their production is significant - 47-50 billion cubic meters per year, but almost everything is consumed by the domestic market. As a result, about 10 billion cubic meters remain for export - far from being the most tasty morsel for the United States,” the analyst explained.

Part of the export volumes goes to Kyrgyzstan, Kazakhstan and Russia. But a large share goes to China via the Central Asian pipeline, Yushkov added.

“In 2020, Tashkent supplied 1.3 billion cubic meters to the CIS countries, of which 0.7 billion to Kazakhstan, 0.1 billion to Russia. China, during this time, received a much larger batch - 3.3 billion, ”the expert noted.

One of the key roles in the development of Uzbek gas fields is played by LUKOIL. The Russian company is now working on a further increase in fuel supplies to China.

“LUKOIL has a well-established business in Uzbekistan. The company actively extracts raw materials, and then resells part of the reserves to Gazprom. In the coming years, Tashkent may well take the first place in gas production in the region - 60 billion cubic meters of gas per year,” the analyst concluded.

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What about shale oil

While Uzbekistan's gas reserves are relatively good, oil production is much worse. The capacity of explored deposits is estimated at about 1 billion tons. However, production has been at a low level for decades, Yushkov noted.

“In 2020, oil production in Uzbekistan amounted to only 2.1 million tons. The peak was in 1998 - 8.2 million, after which the figures decreased by almost four times. At the same time, exports are almost zero, ”the analyst emphasized.Mitrakhovich also gave a pessimistic assessment of Uzbekistan's oil prospects. His fears were caused by the method of extraction of shale raw materials.

“Shale oil is very capricious. For production to be profitable, exchange prices must be high - in the region of $ 80-90 per barrel, companies must have expensive equipment at their disposal.

But the most important condition is a sufficient amount of fresh water for hydraulic fracturing. Uzbekistan has long had serious problems with this,” he explained.

According to the expert, Tashkent is extremely dependent on water supplies from the mountainous regions of Kyrgyzstan and Tajikistan. However, in the near future the country may lose these sources as well.

“In recent years, Kyrgyzstan and Uzbekistan have been on the verge of a “water” war several times. Recently, the Kyrgyz authorities announced plans to build a hydroelectric power station. If this happens, less water will reach Uzbekistan, which is essential for cotton production. So the prospects for shale oil in the country remain extremely doubtful,” the expert summed up.

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