From Russia with gas: Why Uzbekistan skips Its neighbors

Starting from August 1, the previously set maximum price limit of 3,750 soums for 1 cubic meter of methane gas was abolished in Uzbekistan. Following this, reports emerged on social media that the price of methane gas had increased to 4,250 soums in certain regions.

In response, Orzugul Ravshanova, head of the Department of Financial and Economic Analysis and Pricing Policy at the Ministry of Energy, assured QALAMPIR.UZ that unreasonable price hikes would not be tolerated.

“For us to have a good autumn-winter season and to prevent artificial price increases, the maximum retail price was capped at 3,750 soums until August 1. Now, we have decided to liberalize prices, returning them to free market rates while ensuring no sharp increases occur with the help of state regulatory bodies.

The purchase price for gas stations is fixed at 1,800 soums with VAT, and resource taxes are indexed only once at the beginning of the year. Therefore, there’s no risk of these costs rising until year-end. Storage and operational costs will also not fluctuate significantly during this period. By considering these factors, it was deemed appropriate to liberalize the prices. However, if there are artificial increases or unjustified pricing against the interests of consumers, the necessary measures will be taken,” said Ravshanova.

When asked about the monitoring of methane gas prices across gas stations, Ravshanova provided insight into the ministry’s preparedness.

“We conducted a social survey alongside Hududgaztaminot JSC, asking gas station operators how much they would sell for if the maximum price limit were lifted. Based on profit margins and operational costs, we collected responses and organized meetings with state bodies to ensure price control within reasonable limits,” Ravshanova added.

A pressing question remains: Why is Uzbekistan importing gas from distant Russia when neighboring countries like Turkmenistan and Kazakhstan, with vast gas reserves, are geographically closer?

Addressing this, a Ministry of Energy official explained that the decision depends more on the seller’s preferences rather than Uzbekistan’s choices as a buyer.

“Given the current political situation, Uzbekistan has reached an agreement with Russia to supply gas at an acceptable price and volume. These agreements are contingent upon the willingness of neighboring countries to sell gas,” the official said.

The official also emphasized that imports should not be overanalyzed, as they constitute only 11-15% of the total gas consumption in Uzbekistan. Greater attention should instead be directed toward the domestic gas industry. However, it was noted that domestic gas production is on a downward trend, which exacerbates the reliance on imports.

Watch the full interview and analysis on the QALAMPIR.UZ YouTube page for further details.