Turkmenistan, Uzbekistan Reach Agreement to Boost Turkmen Gas Exports

The chairman of the People’s Council of Turkmenistan, Gurbanguly Berdimuhamedow, and Uzbek President Shavkat Mirziyoyev have reached an agreement to increase Turkmen gas exports to Uzbekistan.

The agreement was reached during a phone conversation on December 5. In addition, both presidents highlighted the significance and prospects of joint gas projects to be implemented in the near future, according to the Turkmen state news agency Turkmenistan Today.

Turkmenistan’s national leader and former president, Berdimuhamedow, referred to the fact that his country has been supplying natural gas to Uzbekistan for many years. He noted the high efficiency of the joint work in the gas sector, pointed out its long-term nature, and “an agreement to increase Turkmen natural gas supplies to Uzbekistan.”

Meanwhile, the press service of Uzbekistan’s president did not mention the gas agreement in its press release, noting that bilateral trade turnover since the start of the year had exceeded $1 billion, with a significant portion attributed to gas trade.

“They discussed the prospects for developing mutually beneficial cooperation in the field of energy and water management,” the report added.

Additionally, the two countries are seeing growth in cargo transit, including through Turkmenbashi port, and are advancing the construction of the Shavat-Dashoguz border crossing.

Turkmenistan has been searching for new markets to sell its gas since late June. The Russian energy giant Gazprom’s previous five-year contract with Turkmengaz, signed in 2019 for the annual supply of 5.5 billion cubic meters of Turkmen gas, expired on June 30, 2024.

The two state-controlled companies were unable to extend their gas supply contract due to a disagreement over pricing. According to the Chairperson of Turkmengaz, Maksat Babayev, Turkmenistan had alternative buyers for the volumes that were previously exported to Russia.

Currently, Uzbekistan relies heavily on gas imports from Russia and Turkmenistan. Uzbekistan’s natural gas imports from these countries increased about fivefold in January-July 2024. Uzbekistan’s gas imports surged in January-October 2024, reaching $1.36 billion – 2.4 times higher than the figures for the first 10 months of 2023.

In December 2022, Uzbekistan for the first time signed a direct short-term contract with Turkmenistan, bypassing Russia’s Gazprom, for the supply of 1.5 billion cubic meters of gas. By August 2023, the two countries agreed on another deal for up to 2 bcm of gas annually and began exploring a long-term contract to increase volumes further.

In October 2023, the Russian, Kazakh, and Uzbek leaders jointly launched the supply of Russian gas to Uzbekistan via Kazakhstan through the Central Asia–Centre gas pipeline as part of a two-year agreement to supply Uzbekistan with 2.8 bcm of natural gas annually. This gas is used to generate electricity and heating at thermal power stations. Plans were also underway to invest $500 million to modernize Uzbekistan’s main gas system to handle increased imports from Russia.

However, Uzbek gas exports decreased during this period. Uzbekistan exported $323.1 million worth of gas to China between January and August 2024, marking a 5.5% decline compared with the previous year. Uzbekistan also stopped exporting natural gas to Russia in 2020, and the volume supplied to China has reduced threefold over the past four years.

Uzbekistan’s domestic gas production has also fallen. Between January and September 2024, gas production decreased by 4.8% compared with the same period in 2023, amounting to 33.48 bcm. This decline follows a broader trend, as production dropped by 16 bcm between 2018 and 2023 “against the backdrop of an increase in domestic consumption.