This week, the media in the region reported on several critical energy stories, such as China rejecting Russian plans to increase gas exports through Kazakhstan, Kazatomprom signing a uranium supply deal with the Czech company ČEZ, Uzbekistan beginning construction work on its first NPP, and OPEC outlining a new compensation plan for several member states, including Kazakhstan. They also covered Russia’s Supreme Court removing the Taliban from the country’s list of terrorist organizations. Several outlets noted Uzbekistan’s plans to suspend all export restrictions by July. Other sources also reported on the surge in remittances sent to Kyrgyzstan, while remittances and economic growth plateau in neighboring Tajikistan. Lastly, the media covered a new investigative report by the International Consortium of Investigative Journalists that revealed that the arbitration case between Kazakhstan and a consortium of international oil companies over the Kashagan field in the Caspian Sea could continue until 2028.

Oil and Gas:

An investigation by the International Consortium of Investigative Journalists has revealed that arbitration over Kazakhstan’s case against the consortium of international oil companies operating the Kashagan field could drag on until 2028 (ICIJ). In the $160 billion case, Kazakhstan claims that a consortium of international energy companies receives 98% of the oil revenue from the field while paying minimal royalties to the Kazakhstani government. Kazakhstan claims that the unequal distribution of oil revenues stems from a 1997 production-sharing agreement. While they amended the agreement in 2008, and the operators of the field agreed to pay royalties, the country’s share of the revenue only increased by one per cent. PSA, a government entity that represents Kazakhstan at the Permanent Court of Arbitration in Geneva, filed another lawsuit in Switzerland in 2024 against several intermediaries who used embezzlement schemes connected to the Kashagan and Karachaganak fields to bribe Kazakhstani officials and compensate Eni executives (Kursiv). The North Caspian Operating Company (NCOC), which operates the fields, counts Shell, ExxonMobil, Eni, TotalEnergies, China National Petroleum Corporation (CNPC), Japan’s Inpex, and Kazakhstan’s state-owned KazMunayGas (KMG) as major shareholders. This news comes after President Tokayev instructed his government to renegotiate current production-sharing agreements on more equal terms. Under the existing contracts, international companies provide the finance and technology to develop the fields. They recoup the cost during the early stages of production before sharing the profits with the government. Energy Insight & Analytics has estimated that between 2016 and 2023, the government received $5.4 billion from the field. While NCOC spent roughly $86 billion developing the field, it sold $55 billion worth of oil during the same period. In 2022, Kazakhstan fined NCOC $5 billion for violating environmental regulations and storing excess sulphur at the field. NCOC challenged the fine in a Kazakhstani court and won before an appellate court later overturned the ruling. The case has now gone to the Kazakhstani Supreme Court. Kazakhstan’s Ministry of Ecology maintains that annual emissions permits apply to newly produced sulphur and existing stockpiles. Meanwhile, NCOC insists that the permits only cover sulphur produced during the year the permit was issued. However, internal documents from Eni show that the company knew they would be fined if they failed to remove the sulphur produced at the field promptly. Nevertheless, NCOC blamed the accumulation on the need to construct a new railway junction and regulators deliberately blocking sulphur exports. In March, Bloomberg reported that NCOC received two favourable rulings regarding the dispute over environmental fines and tax claims (Bloomberg). However, the rulings did not resolve the whole case. The arbitration court granted their request that only the counterparty in the contract, the Ministry of Energy’s Representative Office, can audit their profits, not the tax authorities. The court also ruled that they should not pay the $5 billion environmental fine until the court has thoroughly deliberated the matter.

China has rejected Russian plans to export an additional 30 billion cubic metres of natural gas through Kazakhstan (Daryo). The Chinese ambassador to Russia, Zhang Hanhui, dismissed the Russian proposal, citing infrastructure constraints. He said the existing pipeline is already operating at capacity, and another pipeline would need to be built. While he acknowledged that the Russian side is studying the construction of a new pipeline, he stated that constructing another pipeline would be exceedingly expensive and unrealistic. He highlighted the planned Power of Siberia 2 pipeline as the most feasible option. The new Power of Siberia 2 is expected to have a capacity of 50 billion cubic metres when complete. However, the project has faced delays due to various financing and political issues. This rebuke represents another significant blow for Russia’s Gazprom. The company has experienced heavy losses in recent years after being shut out of the European market in 2022. In 2024, they posted an annual loss of $7 billion. Some reports estimate their losses could grow to $179 billion over the next decade. As a result, the company is undergoing considerable restructuring and cost-cutting efforts, which could lead to up to 40% of the company’s personnel being laid off. Gazprom has also pulled out of multiple international projects. Last week, we reported that they had exited the Shahpakhty project in Uzbekistan.

OPEC+ has confirmed how much overproduction Kazakhstan has to compensate for (Kursiv). According to the updated compensation plans, Kazakhstan must compensate for 1.3 million barrels per day of overproduction by June 2026. Kazakhstan will compensate 63000 barrels per day in April, 116000 in May, 126000 in July, 141000 in August, 135,000 in September, and 160,000 in October. The amount will then decrease from 114000 in November to 36000 in June 2026. Under the plan, seven countries must compensate for 4.572 million barrels per day. Other OPEC+ states have repeatedly criticised Kazakhstan’s overproduction and failure to compensate. Nevertheless, in early April, OPEC+ announced its first production hike since 2022. Starting in May, they expect to increase production by 411000 barrels per day.

Diplomatic Events:

The Russian Supreme Court officially removed the Taliban from the country’s list of terrorist organisations (Daryo). The Prosecutor General requested the Taliban’s removal from the list, citing changes to the Code of Administrative Judicial Procedure and the Federal Law on combating terrorism in December 2024, which permits authorities to lift the ban on a terrorist organisation if it has ceased supporting terrorism against Russia. While Russia has not recognised the Taliban as the official government of Afghanistan, since the Taliban returned to power in 2021, they have sought to expand cooperation, especially in combating ISIS-K, which is believed to have been behind the Crocus City terrorist attack in Moscow last year (Reuters). Several countries in the region have also expressed a willingness to reconsider their relationship with the Taliban.

Trade:

While visiting Andijan, Uzbekistani President Shavkat Mirziyoyev outlined plans to build trade and industrial zones along the country’s border with Kyrgyzstan (Gazeta.uz). Noting that $200 million worth of goods are exported from Andijan to Kyrgyzstan annually, he emphasised constructing a free trade zone in the Qorgontepa or Khojaabad district. He also addressed the congestion at the Dostlik border checkpoint and instructed the responsible agencies to present solutions. Lastly, he discussed the China-Kyrgyzstan-Uzbekistan railway, which he claimed would reduce journey times by a week and increase cargo volumes ten times. While construction has begun, various issues remain unresolved. For instance, they have not agreed on the track gauge and the construction cost in several mountainous areas.

President Mirziyoyev announced that Uzbekistan will lift all export restrictions from July 1, 2025 (Kun). On April 18, he attended a meeting to address the bureaucratic hurdles businesses face. He emphasised creating equal conditions for all businesses. For instance, he noted that some goods are imported at artificially low prices, making it difficult for local producers to compete. He said a new decree will fully align the customs valuation for imported goods with international standards. The government has also introduced a new marking system for certain goods, such as tobacco, household appliances, and pharmaceuticals. The Tax and Customs Committee has been assigned responsibility for ensuring compliance and the smooth functioning of the marking system. Several participants noted that export restrictions have hampered attempts by local businesses to expand and export their goods abroad. Hence, the President announced the removal of export restrictions on July 1. However, export duties will still apply to 86 products, including raw materials.

Nuclear Energy:

Kazakhstan’s national atomic company, Kazatomprom, has signed an agreement with the Czech energy company, ČEZ, to supply uranium concentrate for the next seven years (Kursiv). Overall, Kazatomprom will provide one-third of the fuel for Czechia’s Temelín nuclear power plant. ČEZ is a significant player in the Central European energy market. It operates six nuclear reactors at the Dukovany and Temelín plants, providing 36% of Czechia’s energy needs. Kazatomprom continues to expand its presence in Europe. Earlier, we reported that they signed a similar agreement with the Swiss companies Kernkraftwerk Leibstadt AG and Axpo Power AG to supply uranium fuel to the country’s Beznau and Leibstadt nuclear power plants.

Uzbekistan has commenced construction of its first nuclear power plant (NPP) in the Jizzakh region (The Tashkent Times). Uzatom confirmed that construction work has begun on the construction and assembly base (CAB). The CAB will house administrative buildings, assembly facilities, and warehouses. The project will see the construction of six of Rosatom’s RITM-200N reactors, each with a capacity of 55 MW. The primary contractor is Atomstroyexport.

Renewable Energy:

In the first quarter of 2025, Uzbekistan generated two billion kilowatt hours (kWh) of green electricity (Kun). The country currently operates eleven solar power plants and three wind power plants with a combined capacity of 4.03 GW. In total, solar power plants produced 1.16 billion kWh, while wind power plants produced 830.1 million kWh. In their report, the Ministry of Energy also confirmed that the wind power plants generated more electricity in the first 3.5 months of the year than in 2024 (799 million kWh). In 2024, seven solar and one wind power plants produced 4.86 billion kWh. The report emphasised that these green energy plants saved 600 million cubic metres of gas and reduced emissions by 1170 tons of carbon dioxide and 1.17 tons of nitrogen oxides. If hydropower is included, then quarterly green energy generation reached 3.7 billion kWh, saving 1.1 billion tons of gas and preventing the emission of 2.17 billion tons of carbon dioxide and 2.17 tons of nitrogen dioxide. By 2030, Uzbekistan aims to generate 54% of its electricity from renewable sources (Kun).

Kyrgyzstan’s National Investment Agency signed a memorandum with the Chinese company CECEP Solar Energy to construct a 600 MW solar power plant in the Batken region (24.kg). The new solar power plant will be one of the largest in Central Asia and will help address the country’s chronic electricity shortages.

Hydropower:

During his recent visit to Andijan, Uzbekistani President Shavkat Mirziyoyev announced that a Chinese company will invest $250 million in a new multi-functional complex in Babur city (Kun). The complex will contain a business centre, hotels, a shopping centre, and 3000 apartments. Another Chinese company, Zinlun Elektromechanic, expressed interest in producing equipment for small hydroelectric power plants (HPP) in Andijan. Recently, President Mirziyoyev approved the construction of 763 small HPPs with a capacity of 44 MW to be completed by the end of 2026. The company also committed to training specialists and servicing all new HPPs free of charge for the first year of operation. In 2025 and 2026, Uzbekistan plans to commission an additional 2983 micro HPPs, with a capacity of 167 MW (Daryo). These new HPPs will save around 151 million cubic metres of gas while generating 500 million kWh of electricity. 1185 of these micro HPPs, with a capacity of 65 MW, will be completed in 2025. Uzbekistan has increased electricity generation by 30% in the last five years, reaching 81.5 billion kWh in 2023. However, with consumption likely to grow to 121 billion kWh by 2035, the government is racing against time to increase generation capacity.

Inflation:

According to a recent Central Bank report, inflation expectations decreased in March in Uzbekistan (Kun). This follows the Central Bank’s decision to raise its base rate. The average projected inflation rate for the next 12 months stands at 14.2%, the lowest since December and a point lower than February, while the median forecast was 11.5%. They recorded the highest inflation expectations in Tashkent at 17.1%. However, this is down by a percentage point compared to February. Businesses also reduced their inflation expectations. Among businesses, the average projected rate fell by 0.8% to 13%, while the median forecast fell to 10.9%. Individuals and enterprises cited utility tariffs as the principal factor influencing their expectations, followed by exchange rate fluctuations and energy costs.

The Eurasian Development Bank (EDB) will expand its investments in Kazakhstan’s transport, energy, and industrial sectors in 2025 (Orda.kz). On April 15, Kazakhstani President Kassym-Jomart Tokayev met with EDB Chair Nikolay Podguzov to discuss future investment plans. In 2024, the bank invested $1.4 billion in Kazakhstan and plans to invest a similar amount in 2025. Under the bank’s Country Strategy for 2022-2026, they have already invested $3.8 billion. Currently, Kazakhstani projects account for 60% of the bank’s investment portfolio. During the meeting, they considered projects valued at $4.5 billion for 2025. This year, they plan to spend $1 billion modernising energy infrastructure, developing renewable energy sources, improving transport infrastructure, and upgrading digital infrastructure.

Remittances:

The Eurasian Fund for Stabilization and Development (EFSD) expects economic growth in Tajikistan to slow to 7.5% in 2025, according to its latest regional economic review (Asia Plus). They attribute the decline to slackening domestic demand and decreasing remittances from abroad. They expect remittances to plateau from 2025-2027 compared to their peak during 2022 to 2024 (The Times of Central Asia). However, the country’s balance of payments will remain stable due to lower capital outflows and fewer foreign currency purchases. In 2024, the World Bank estimated remittances accounted for 45% of Tajikistan’s GDP, compared to 24% in Kyrgyzstan and 14% in Uzbekistan. The Asian Development Bank (ADB) anticipates the share of remittances to fall to 37% of GDP in 2025. The EFSD warned about mounting inflationary pressures, particularly regarding food prices. However, they remain optimistic that inflation will stabilise in the long term. They highlighted falling global commodity prices, especially for metals and agricultural products, and increasing protectionist measures in the region, which could impact Tajikistan’s economy. They noted that Uzbekistan recently increased import duties on Tajikistani cement. Economic slowdowns in Russia and China could also affect Tajikistan. Similarly to the EFSD, the ADB forecasts annual economic growth at 7.4%, while the Tajikistani government aims to keep growth above 8%. Remaining optimistic, the ADB cites rising investment, increased industrial and agricultural output, and continued remittance flows as factors supporting the continued development of Tajikistan’s economy.  

The Eurasian Development Bank reported that the net inflow of remittances to Kyrgyzstan increased to $414 million in early 2025 (24.kg). This growth amounted to a year-on-year increase of 15.5%, compared to 18.6% in 2024. The increase in remittances also supported domestic demand, with retail trade increasing by 17% in the same period. The EDB forecasts Kyrgyzstan’s economy to grow by 8.7% in 2025, aided by strong domestic demand and investment (24.kg). They also anticipate inflation to be around the Central Bank’s target of 5%.