From gas powerhouse to dependency: How Uzbekistan became a net importer of natural gas

Gas shortages in Uzbekistan have severely impacted the national economy and the quality of life for its population. During winter, unheated homes, long queues at methane refueling stations, and tens of thousands of entrepreneurs being cut off from the gas network are common. These damages remain unquantified and are often justified as “a widespread problem” or blamed on “anomalous winters.”

A 30% decline in 13 years

Natural gas is a strategic resource for any country, including Uzbekistan. It has a significant influence on the economy, energy security, and trade balance.

According to recent data, over 70% of Uzbekistan’s electricity generation relies on natural gas. However, gas production is steadily declining. Between 2010 and 2023, production dropped by nearly 30%, or 19.2 billion cubic meters.

Statistics indicate that during this period, natural gas production shrank by 30%.

The downward trend continued this year. For example, from January to November, 40.7 billion cubic meters of gas were produced, which is 4.7% less than the same period in 2023. The situation may worsen further next year. Uzbekistan’s largest gas producer, Uzbekneftegaz, plans to produce 26.5 billion cubic meters of natural gas in 2025. This is 2.8 billion cubic meters less than the 2024 forecast and 5.7 billion cubic meters less than the 2022 production volume.

Despite borrowing billions of dollars to boost gas production, results have been underwhelming. For instance, Uzbekneftegaz intends to attract $2 billion in foreign loans next year to finance production projects and geological exploration.

From gas exporter to net importer

Uzbekistan was a gas-exporting nation for many years. However, exports began to plummet starting in 2020.

In 2017, gas exports amounted to $1.39 billion, rising to $2.42 billion in 2018, $2.26 billion in 2019, but dropping to $478 million in 2020, a pandemic year. In 2021, exports recovered slightly to $717 million, then $911 million in 2022, and $530 million in 2023.

Between 2018 and 2023, gas export revenue declined by about 4.6 times.

Uzbekistan's gas was primarily exported to countries like Russia, China, and Kyrgyzstan. However, gas exports to Russia ceased in 2020, and deliveries to China began to decline.

Notably, Uzbekistan has never disclosed the export price of its gas, labeling it a “commercial secret.”

In the first 11 months of this year, gas exports amounted to $593 million, 16.5% higher than the same period last year. Despite shortages, exports have not ceased, reportedly due to a long-term agreement between Uzbekistan and China. However, the details of the agreement remain undisclosed.

Starting last year, authorities began compensating for domestic shortages by importing gas from Turkmenistan and Russia. For instance, in August 2023, Uzbekistan signed a short-term agreement with Turkmenistan to import up to 2 billion cubic meters of gas annually. In October, Russian gas started being delivered to Uzbekistan via Kazakhstan. Consequently, years of inefficient economic and energy policies have left a gas-rich country dependent on foreign imports.

In 2023, Uzbekistan imported $695 million worth of gas, a figure that jumped to $1.552 billion in the first 11 months of this year—2.8 times higher than the same period last year.

According to Energy Minister Jurabek Mirzamakhmudov, if exploration efforts at the Ustyurt fields fail to yield results, gas imports could rise to 10–11 billion cubic meters annually by 2030.

Like other agreements, the terms of gas import contracts remain undisclosed. Russian media reported that Uzbekistan imported 1.22 billion cubic meters of Russian gas via Kazakhstan last year at a price of approximately $160 per 1,000 cubic meters. In comparison, Kyrgyzstan reportedly buys Russian gas at around $112 per 1,000 cubic meters.

Overall, the trade deficit between gas imports and exports in Uzbekistan amounted to $165 million in 2023 and $959 million in the first 11 months of 2024.

A historic opportunity to purchase Turkmen gas

Many countries worldwide are rich in natural gas, including Uzbekistan’s neighbor, Turkmenistan. According to Statista, Turkmenistan’s proven natural gas reserves are approximately 14 trillion cubic meters, ranking it fifth globally after Russia, Iran, Qatar, and the U.S. Since Turkmenistan lacks large-scale industrial production, most of its gas is exported. In recent years, Turkmenistan’s gas production has significantly increased, reaching 80.6 billion cubic meters in 2023 compared to 66 billion cubic meters in 2020.

Turkmenistan’s main gas customers have traditionally been China, Russia, and Iran. However, this summer, gas supplies to Russia ceased when their contract expired. Under a 2019 agreement, Turkmenistan was supposed to supply Gazprom with up to 5.5 billion cubic meters annually. Given the situation, Turkmenistan needs to find new buyers for its gas. Exporting to Europe via the Trans-Caspian pipeline remains a long-term prospect, while constructing the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline requires significant investment and will take years to complete.

This situation presents Uzbekistan with a historic opportunity to address its energy challenges affordably, conveniently, and for the long term. In early November, both countries announced an agreement to increase gas supplies. However, there is no information about a long-term contract yet.

How much gas does Uzbekistan have?

As of January 1, 2021, Uzbekistan’s proven natural gas reserves were estimated at 1.867 trillion cubic meters. Based on current production levels, these reserves were projected to last at least 34 years. In February 2021, former Energy Minister Alisher Sultanov emphasized in an interview with “Voice of America” that “our gas could sustain three Uzbekistan.”

As of August 2023, Uzbekistan reported having 296 oil and gas fields with total reserves of 1.854 trillion cubic meters. Out of these, 122 fields belong to Uzbekneftegaz, accounting for half of the country’s reserves—933 billion cubic meters.

OPEC estimates Uzbekistan’s gas reserves at 1.522 trillion cubic meters, representing 0.74% of global reserves and ranking 22nd worldwide. Another international source lists Uzbekistan’s reserves at 1.841 trillion cubic meters, placing it 17th among gas-rich nations.

Can gas production be increased?

Given Uzbekistan’s substantial reserves, one might wonder why the country doesn’t rely on domestic production instead of imports. The “Uzbekistan 2030” strategy adopted last year aims to increase natural gas production to 62 billion cubic meters annually. This would represent a 33% increase in production over seven years.

However, production continues to decline. Officials attribute this to technological and economic challenges at many fields, rising production costs, and the need for investment. Despite programs, foreign loans, and significant budget allocations to boost production, results remain elusive. The country is becoming increasingly dependent on foreign markets.