Islam Karimov (left) has waited long to see the day when Moscow is finally ready to pay almost anything for Central Asian gas – only to make sure it does not go to Europe bypassing Russia.
Photo: Dmitry Azarov
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Islam Karimov Gets the Pipes Ready for a Fight
// The Uzbek leader will discuss his favorite topic with Vladimir Putin
Uzbek President Islam Karimov arrived in Moscow on Tuesday to hold gas talks with Russian leader Vladimir Putin on Wednesday. Kommersant sources report that like his neighbors Turkmenistan and Kazakhstan, Uzbekistan is going to ask higher prices for its gas and increase transit fees for Turkmen gas.
No Agreement to Visit
Islam Karimov’s Wednesday visit to Moscow is his first foreign trip after he was elected for another term in office. According to Kommersant sources, Uzbekistan insisted that the visit have a state status, which will mean Moscow will give all possible honors to the Uzbek leader. Russia argued that under the international protocol, a president can visit a country with a state visit only once in his lifetime. However, Mr. Karimov already paid two state visits to Moscow in 1998 and 2001. In the end the Kremlin got Tashkent around to agree to the status of an official visit.
Islam Karimov is to start talks in Moscow meeting Russia’s First Deputy Prime Minister Sergey Ivanov who is a co-chairman of the Russian-Uzbek governmental commission. Mr. Ivanov knows Islam Karimov well. He visited Tashkent quite a number of times in the recent years, observed joint anti-terrorism maneuvers and took an active part in drafting an agreement on allied relations that the two countries sealed in 2005, six months after the violent suppression of an uprising in Andizhan.
Islam Karimov will also meet another First Deputy Prime Minister Dmitry Medvedev, Prime Minister Vladimir Zubkov and President Vladimir Putin.
Talks between Islam Karimov and Vladimir Putin will focus on a proposed increase in prices for Uzbek gas and transit fees for Turkmen gas. Uzbekistan has recently come up with new conditions that Vladimir Putin is going to brush aside, according to a Kommersant source.
No Agreement for Transit
Gazprom says that the December 27 contract with Uzbekneftegaz set prices and transit fees for 2008 “with the terms comparable to those in all Central Asian countries”. Uzbekistan later announced the price. In the first half of 2008, Gazprom will pay Uzbekistan $130 for 1,000 cu. meters of gas and $160 in the second half of the year. The transit fee for Turkmen gas was not revealed. Elsewhere, Kazakhstan announced in late January that it would raise transit fees from $1.1 to $1.4 for pumping a 1,000 cu. meters of gas in 100 kilometers on April 1, 2008. Apparently, Tashkent decided to use the neighbor as an example and raise transit fees. Gazprom on Tuesday would not comment the upcoming talks.
While Uzbek gas prices reportedly have been set for 2008, prices for 2009 are still up for discussion. In 2009, Uzbekistan, Kazakhstan and Turkmenistan will be selling gas on the so-called price formula. Gas companies of these countries do not specify how this formula is going to be calculated but there are grounds to think that prices will skyrocket to $195.
Reuters quoted a top manager of Chinese oil firm PetroChian last week saying that that the country agreed to buy Turkmen gas for $195 per 1,000 cu. meters. “Beijing has signed up to a gas price of $195 per 1,000 cubic meters,” Hou Chuangye, deputy manager of the firm’s pipeline and gas unit, said. Russian news agency Interfax reported several days later that $195 is just a price that Turkmen officials would wish to see. But a Kommersant source in Turkmengaz confirmed last week that the $195/1,000 cu. meters deal with the Chinese will be signed this Wednesday. The source said Tuesday that the signing was rescheduled for next week. So, the Chinese may succeed in knocking off the prices in Turkmenistan.
But the discount will not matter much. When Iran refused to buy Turkmen gas at $140 (because it paid $75 in 2007) Turkmenistan cut off the supply for New Year holidays, the country’s coldest season. It is very unlikely that the Turkmen president will be more patient with other partners. Uzbek President Islam Karimov apparently looks up to him.
The gas issue in Central Asia is getting even more uncertain as the EU steps up efforts to build Nabucco, a gas pipeline that would go from Central Asia to Europe bypassing Russia. Germany’s RWE and French Gaz de France said a few days ago they would join the project. Azerbaijan and Turkmenistan are showing their interest, too. Turkmen President Gurbanguly Berdymukhammedov is due to visit Baku in the first half of the year. Relations between the two countries separated by the Caspian Sea have always been tense, which was the main obstacle on the way to create a trans-Caspian gas pipeline which could make up a part of Nabucco. If President Berdymukhammedov makes it to Azerbaijan after all, the main obstacle will disappear. What is more, the Turkmen leader has promised to audit his country’s gas deposits, which is what the EU expects of a country willing to join Nabucco project.
All considerable impediments to the construction of the gas pipeline from Central Asia to Europe bypassing Russia may disappear in the next few months. Moscow will surely do its best to foil these plans. The only way to nip Nabucco in the bud is to strip it of resources, that is to buy up all Central Asian gas.
Rovnag Abdullaev, president of State Oil Company of Azerbaijan Republic, said in an interview with ANS Television on Tuesday that Gazprom is interested in Azeri gas as well. “We offered Gazprom in May 2007 to buy our gas at $230,” he said. “But we didn’t reach agreement then, because they wanted to buy it at a lower price.” In 2009, Azerbaijan will surely try to sell gas at $200, and this statement will make Islam Karimov more confident in asking for more.
Unexpected U-turn
Another thing that may embolden Uzbekistan is unexpected support from the West. Russia was Uzbekistan’s main and probably the only ally in the past few years and could make use of this monopolistic friendship to its own ends. But the need to diversity gas supplies prompted Europe and the United States to start to pay court to Uzbekistan again.
There have recently been signs that Uzbekistan is breaking international isolation which caught the country after the violent suppression of an uprising in Andizhan. Head of the U.S. Central Command Admiral William Fallon visited the country in late January. Uzbekistan has no seen similar visits since Tashkent decided to send away the U.S. military base from the country in 2005. To everyone’s amazement, Islam Karimov suddenly sounded very pro-West. “There are still people who speak about some disagreements between Uzbekistan and the United States and Europe,” he said at a meeting marking the 15th anniversary of the country’s independence. In its foreign policy Uzbekistan has always valued mutually beneficial cooperation and mutual respect with all close and faraway neighbors alike including the United States and Europe.”
Statements like this would be very characteristic of Islam Karimov five years ago when he was considered one of the most West-leaning leaders in the CIS. But violence in Andizhan forced him to change this direction, leave the GUUAM and join the pro-Russian Collective Security Treaty Organization. It is not likely that Uzbekistan will make a U-turn back again but Tashkent might as well decide to flirt with the West to bargain higher gas prices and transit fees. China is Uzbekistan’s second best friend. But Moscow is worried about Tashkent’s close ties with Beijing, and the Uzbek leader may make use of this concern. Finally, Islam Karimov will not want to run behind neighboring Kazakhstan and Turkmenistan, and therefore $195 in talks between Turkmenistan and China will probably be the only benchmark for him.
Mikhail Zygar and Natalya Grib
All the Article in Russian as of Feb. 06, 2008
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