Russia eyes Central Asia as EU presses on with oil price cap and sanctions

Russian President Vladimir Putin has proposed creating a trilateral union with Kazakhstan and Uzbekistan to resolve gas sector issues as Russia faces the European Union’s imposed price cap on its oil and an embargo on its crude oil exports by sea.

On November 28, Kazakh President Kassym-Jomart Tokayev visited Moscow, meeting with Russian President Vladimir Putin and other top Russian officials.

During his meeting with Putin, as Russian news agency Interfax reported, the Russian leader suggested forming a “trilateral [gas] union” and Tokayev responded positively, saying, “Why not?”

Tokayev said Putin would call the Uzbek president to discuss the proposal.

Following the news of the proposal, Tokayev’s spokesman, Ruslan Zheldibay, posted a clarification on Facebook , saying that discussions of a trilateral union were in order to coordinate the transportation of Russian gas through the territory of Kazakhstan and Uzbekistan.

“Kassym-Jomart Tokayev and Vladimir Putin believe that it is necessary to conduct detailed negotiations with the participation of experts from three countries to find a rational solution to this problem, taking into account the interests of all parties,” Zheldibay said.

However, Uzbekistan has shown resistance to the idea from the outset. In an interview with the Kun.uz news website published on December 7, Uzbek Energy Minister Jorabek Mirzamahmudov said that his country would not give up its national interests in exchange for natural gas.

“We will never compromise our national interests. Even if we [agree to receive natural gas from Russia], we will proceed via commercial sales contracts. We will not allow any political conditions to be imposed in return,” he said, adding that Uzbekistan will agree to get natural gas from Russia only “at a reasonable price”.

The Kremlin on December 8 denied intentions to impose political terms.

“Nobody is talking about gas in exchange for political concessions. This is not being discussed in the context of the idea of creating this union,” the TASS news agency quoted Kremlin spokesman Dmitry Peskov as saying. 

Peskov noted that creating a gas union implies coordinating the actions of countries in commercial interests. “Work continues in this regard,” he said.

“The countries are interested in coordinating their actions on the further laying of transport routes, on determining further directions for the development of gas infrastructure, on meeting their domestic needs for natural gas and here everything is quite closely intertwined,” he added.

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Moving eastward 

Observers say that Moscow is desperate to nip in the bud any form of integration in the strategic Central Asia region that stretches between China, Afghanistan, Iran and Russia, which does not involve the Kremlin.

Kazakhstan and Uzbekistan have been working on strengthening economic cooperation since the beginning of the year. 

Deputy Prime Minister and Minister of Investments and Foreign Trade of Uzbekistan Sardor Umurzakov met with Minister of Trade and Integration of Kazakhstan Bakhyt Sultanov on February 11 to discuss the development of the countries' partnership in trade and investment, transport and industry.

Heavily dependent on oil and gas revenues and Russian and Chinese economic support, the government of Kazakhstan began looking to diversify its economy and attract foreign direct investments following several mass protests in January over a sudden sharp increase in liquefied gas prices.

On the other hand, several western nations led by the US have slapped wide-ranging sanctions on Russia over its offensive in Ukraine. As a result, Moscow has been working on directing more of its energy sales eastward.

Currently, Kazakhstan and Uzbekistan share a gas pipeline to Russia and a pipeline transporting natural gas from Turkmenistan to China.

In early December, China completed a pipeline that can carry Russian gas to Shanghai.

Beijing has become Russia's biggest buyer of energy imports. It has nearly doubled the amount of oil, gas and coal it procures from Russia since before the war.

The Kremlin could sell more of its oil by linking its northwestern gas fields through the Central Asia region.

Strengthening energy cooperation with Russia could help the Central Asia region as Russia is a major natural gas exporter, while the amount of natural gas produced by Kazakhstan and Uzbekistan is barely enough for their consumption.

However, striking a deal could still prove challenging as both Uzbekistan and Kazakhstan have kept their distance from Moscow since it launched its war on Ukraine in February.

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