Tajikistan Attempts To Grow Its Gas Industry

Via Energy Daily, an interesting look at Tajikistan’s efforts to grow its gas industry.  As the article notes, while the former Soviet republics ringing the Caspian — Azerbaijan, Kazakhstan and Turkmenistan — have been the object of intense struggle between Moscow and Washington since the collapse of communism in 1991 in their new energy “Great Game,” other new former Soviet nations further east because of their geographical isolation have been largely marginalized in the contest:

“….Tajikistan, the poorest of the former Soviet republics, has little to show for its years of independence besides the brutal 1992-1997 civil war between the former Communist leadership and Islamic militants. By its end 50,000 were dead and the country’s economy was in tatters. One of the few Soviet legacies left unscathed during the conflict was Tajikistan’s massive Nurek hydroelectric facility on the Vakhsh River, which epitomizes the country’s heavy dependence on hydroelectric power.

The World Bank estimates that hydroelectric power accounts for 76 percent of Tajikistan’s total energy output. Nurek alone still supplies 70 percent of Tajikistan’s power.

Last winter was brutal in Tajikistan, when despite the fact that the authorities increased water flows through its hydroelectric dams, people froze to death during the coldest winter in 50 years. This winter looks similarly severe, and Tajik authorities are already projecting 15-hour daily blackouts this winter to conserve energy.

Furthermore, hydroelectric power involves Tajikistan in interminable disputes with its western downstream neighbors. Uzbekistan, Kazakhstan and Turkmenistan want regular water flows, particularly during the spring and summer for their agriculture, while Tajikistan and its neighbor Kyrgyzstan are increasing storing water in their reservoirs to generate electricity during the autumn and winter months, disrupting agriculture and causing flooding further downstream. Tajik and Kyrgyz attempts to get their Western neighbors to either purchase water or barter it for subsidized hydrocarbon energy imports have not succeeded.

Now, however, a foreign oil company, having succeeded in rising petro-state Kazakhstan, is preparing to boldly go into the country. A subsidiary of Tethys Petroleum Ltd., which describes itself on its Web site as “Domiciled in (the) Cayman Islands,” Tethys Tajikistan Ltd. has been exploring for oil and gas fields in the mountainous nation, and on Dec. 18 Tethys Tajikistan head David Robson met with Tajik President Emomali Rahmon to brief him on the results of their surveys.

Tethys Petroleum Ltd. is heading into an impoverished economic environment whose corruption has induced caution in other Western energy firms. The company’s Web site lays out its strategy, stating, “Tethys’ objective is to build a diversified oil and gas exploration and production company, initially focused on Kazakhstan and Central Asia, with a mixture of high potential exploration for longer-term upside and asset growth, coupled with short-term cash flow generative projects.”

In light of the company’s strategic objectives, on June 13 Tethys signed a contract to develop Tajik oil and natural gas fields. Following the signing ceremony, Tajik Energy and Industries Minister Gul Sherali told journalists that under the agreement Tethys received licenses for 56 gas and oil fields, including the Khoja Sartez, Uzunohor, Pushiyon and South Pushiyon gas fields, which Sherali states have total estimated reserves of 1.5 trillion cubic meters. Under the production-sharing agreement, Tajikistan receives 30 percent of Tethys’ natural gas output, with the figure rising to 50 percent once Tethys recoups its costs.

There is certainly room for growth, as Tajikistan’s oil and natural gas industry is currently almost nonexistent. The U.S. government estimated that Tajikistan’s oil production last year was a paltry 280 barrels per day, while in 2006 Tajikistan produced only 1 billion cubic feet of natural gas, forcing it to import 44 bcf to meet domestic demand.

Robson informed Rahmon that his company had already begun producing natural gas from its Komsomol field near the capital Dushanbe and from its Khoja Sartez concession field not far from the town of Kulob, adding that both fields would begin supplying the two towns within the next few days. According to Robson, this winter Tethys Tajikistan Ltd. will supply 15,000-100,000 cubic meters of natural gas daily to Dushanbe.

Perhaps somewhat rashly, Robson assured Rahmon that his company would be able to make great strides to “fully provide” the natural gas needs of the Tajik populace and industry by 2010, telling reporters, “To achieve these goals the importation of the necessary machinery, equipment and additional technologies, as well as surveying and extraction is being carried out at a rapid pace.”

Robson may have to quicken his pace if the winter is severe, as Tajikistan currently imports its natural gas from Uzbekistan. Since Tashkent is less than pleased with Tajikistan’s stance on water discharges, prices for Uzbek gas have been climbing steadily higher. Before 2006 Tajikistan paid less than $50 per 1,000 cubic meters of Uzbek gas; earlier this year Dushanbe was paying $145 per 1,000 cubic meters, and Tashkent is now discussing raising the price to $300 starting next year.

Tajikistan becoming self-sufficient in natural gas production, while depriving Uzbekistan of a lucrative local market, may actually prove to be a blessing in disguise for Tashkent, as if the country can lessen its dependency on hydroelectric power then negotiations can proceed on regularizing water discharges, which are the mainstay of Uzbekistan’s cotton crop, currently worth $1 billion annually.

For Tajikistan’s citizens, their immediate interests are more prosaic than seeing the country achieve independence in natural gas production within two years, starting with merely surviving the winter, and, as a possible bonus, having the electricity on for more than nine hours a day.

This entry was posted on Friday, December 26th, 2008 at 5:55 am and is filed under Tajikistan.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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