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Trade roads change over time: silk turns into energy on the Great Energy Road- Uzbekistan and India
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The Great Silk Road is one of the top tourist destinations that tourism agencies use to bring travelers to Uzbekistan. Several cities in Uzbekistan lay on the ancient trade route, some of which acquired great wealth and became extremely wealthy cities, including Bukhara and Samarkand.
Tourist companies keep selling travel packages, and one of them Oriental Express CA Ltd., based in Tashkent, Uzbekistan, also reaches out to people living in countries that celebrate excellent relations with Uzbekistan. One of those countries is India. Oriental Express publicizes that Uzbek people love Indian songs and Bollywood stars and that the National Uzbek TV shows at least three Hindi films every week dubbed in Uzbek language. These films are very popular. Considering that Adventures of Ali-Baba and the Forty Thieves was filmed in Uzbekistan in 1980 in collaboration with Indian film studios, it’s no surprise. India also became a great civilization as a result of the development of the Silk Road’s trade
Today political relations between India and Uzbekistan continue to flourish. On October 23rd, the President of Uzbekistan Islam Karimov met with India’s Foreign Minister Somanahalli Krishna in Tashkent. President Karimov shared that relations between the two cultures are based on historical, cultural, and spiritual closeness of the people as well as on the principles of mutual trust and respect. Foreign Minister Krishna became foreign minister in May. His education in the US preceded a long career in politics in India. He made his first trip to Russia since becoming foreign minister five months ago.
The Great Energy Road may become one of the great trading routes of our time. While the Embassy of Uzbekistan in New Delhi reports that Indo-Uzbek relations have been characterized by frequent exchanges of high level visits since 1991, cooperation agreements have ranged from cultural, military, educational, economic, trade, capital goods, and entrepreneurialship. It is not until 2006, that the Embassy mentions that agreements were signed specifically dealing with the field of energy.
The Center for Strategic and International Studies (CSIS) reported in 2007 that India’s “Look West” policy has made it apparent that India has had its eye on Central Asia for a long time. CSIS reports that since 1991, the five new neighbors to India (Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan) gained significant geo-strategic importance. India’s relentless energy needs and Central Asia’s abundant energy resources have been key motivational drivers for India’s presence in the region.
While the Ministry of Foreign Affairs of the Republic of Uzbekistan does not indicate what exactly was discussed in terms of further expansion of cooperation between the countries, more than likely they talked about energy. They talked about energy cooperation in 2006 when the Indian Prime Minster Singh to Tashkent visited and they signed several agreements in the fields of energy, business, education, mineral prospecting, international terrorism fight, fight against religious extremism and drug trafficking. At that time, the energy consumption of India was likely to grow at over 6% per year, according to the Embassy of the Republic of Uzbekistan in New Delhi.
While the energy production potential of Uzbekistan in fossil fuels is high, the call by many industrial countries for renewable energy has changed the energy field and the demands it faces. According to United Press International reporting in 2007, solar power has been receiving renewed attention particularly in Uzbekistan. The quarterly journal Geliotekhnika (Applied Solar Energy) has been published by the Uzbek Academy of Sciences since 1965. Uzbekistan has an immense potential for solar energy but the high start-up costs have been an obstacle, leading to modest initial projects.
While some analysts have compared Uzbekistan’s use of energy dependence of its negotiating partners for political purposes to Russia’s geopolitical energy tactics - specifically with Ukraine - the threat of export prices strengthen their political influence over countries like Kyrgyzstan and Tajikistan.
According to the Chairman of the Management Board of the National Holding Company “Uzbekneftegaz,” Nurmuhammad Ahmedov, the oil and gas industry of Uzbekistan is one of the largest sectors of the economy and very significant to the energy base of the country. According to the Embassy of the Republic of Uzbekistan, there are over 2900 deposits, including 100 types of minerals, over 60 of which are already being exploited. It is among the top ten countries of the world in its uranium reserves, ranks second in Central Asia in coal reserves, and has huge deposits of oil and natural gas. It is one of the largest natural gas producers among the Commonwealth of Independent States (CIS). According to Kiyoshi Taniguchi and Iskander Gulamov of the Uzbekistan Resident Mission (URM), Asian Development Bank, Tashkent, the hydrocarbon sub sector has boomed in recent years as a result of surging commodity prices internationally, buoyant external demand, and heavy public and private investment. URM’s primary role is to analyze economic and sector activities, policy dialogue and support, country reporting and strategy, portfolio management and project administration, and government, civil society, and private sector relations. In 2008, state enterprises benefited from high commodity and utility prices, especially in hydrocarbons. URM projects that an increase in gas exports, which were expected to double in dollar terms in 2009, will partly offset the decline in nonhydrocarbon exports. URM has expected that the contraction in external demand for major export commodities, excluding gas, and the decline in commodity prices in 2008 is to be expected to continue in 2009-2010.
While, in 2007, Russia was the sole export destination of Uzbek gas, far below market value, Uzbek authorities in 2009 announced that they wanted to increase natural gas exports by 8% in 2009. However, in January of this year, Russia and Uzbekistan signed a deal that increased Russia’s monopoly of the existing and projected gas exports.
On the contrary, in May, according to the Uzbekneftegaz national holding company deputy chairman Shavkat Majitov, “Uzbek natural gas will be fed through the Uzbekistan-China gas pipeline.” Apparently, Uzbekistan had earlier said that Uzbek gas was not planned to be supplied through the pipeline. Chinese companies in Uzbekistan will extract the natural gas.
In 2002, Indian’s Oil and Natural Gas Corporation – Overseas, was very interested in a proposed Russia-China-India pipeline that would connect gas fields from Russia, through Turkmenistan, Uzbekistan, Kazakhstan, to Chinese Xinjiang, and enter Indian-occupied Kashmir via Ladakh to cross the Siachen glaciers and the India-China Line of Control to supply gas in Northern India, according to Central Asia-Caucasus Institute. Talks continued in 2006. Experts, like Aftab Kazi from CACI, have suggested that China would not grant India a corridor for the pipeline across the line of control on the China-India border for security reasons. Interestingly enough, it was reported by Energetica.net, that China, Russia and India cooperated for the first time at the ministerial meeting of the International Energy Association (IEA), which took place in Paris last week. The IEA calls this cooperation a positive step in recognizing joint, energy-related interests and concerns. Ministers from all member countries supported a tender of establishment of a clean energy technology platform. The ministers of 28 member states of the IEA and the European Commission have jointly agreed that they intend to ensure a reliable, sustainable and cleaner energy future and develop renewable energy sources in the future.
Still India wants to expand its access to investment in Russia’s oil reserves. According to Deutches Institut fur Entwicklungspolitik’s discussion paper, “China’s and India’s Emerging Energy Foreign Policy,” China and India have agreed to a non-aggression pact between both countries’ internationally active energy companies. No unfortunate energy wars between China and India for energy resources. China has signed deals with Turkmenistan, Uzbekistan, and Kazakhstan to build a Central Asia-China gas pipeline. It is building a $7.3 bn Central Asia – China gas pipeline designed to deliver up to 40bn cm of gas annually from Turkmenistan through Uzbekistan and Kazakhstan.
In Central Asia, a memorandum of cooperation (MOC) to jointly pursue gas projects covering exploration and production (E&P), gas processing, production of petrochemicals as well as training, was signed in April 2006 during Prime Minister Manmohan Singh’s visit to Uzbekistan by state-owned Gas Authority of India Limited (GAIL) and state-owned UzbekNefteGaz (UNG). UNG provided India’s leading companies a list of (E&P) projects in which they could invest.
India’s Prime Minister in 2006 said, “We consider Uzbekistan an important partner in energy.”
According to the Ministry of Commerce, Government of India, Export-import Data Bank, between 2007 and 2008, India’s trading with Uzbekistan added up to 40.32 million ($) in exports, 16.08 million ($) in imports, with total trade at 56.40 million ($).
On April 26, 2009, GAIL and UNG signed seven Memorandums of Understanding (MoUs) including in the fields of petroleum and natural gas, according to a briefing paper entitled “India should go for FTA with Central Asian Countries,” by the Centre for International Trade, Economics & Environment (CUTS) that was published this month.
As far as how this might impact the US, according to an April release by the Press Service of the President of the Republic of Uzbekistan, an American expert, Dr. P. Morvij, the director of the Global Science Publication Center and professor at the State University of New York, who praises President Karimov’s book “The global financial-economic crisis, ways and measures to overcome it in the conditions of Uzbekistan,” released in March, believes that the US should develop constructive cooperation with Uzbekistan for two reasons:
“First, the Central Asian region is a gate on the way to Afghanistan, China, Muslim nations of the Middle East and India. In this context, we must consider the constructive economic growth of Uzbekistan as a model for developing and turning Central Asia into economically self-sufficient region.
Second, President Islam Karimov plays a key role in strengthening the economic ties with other countries in the region. In his state political activity a main attention is being paid to ensuring stability, economic growth and political cooperation."
Welcome to the new Great Energy Road.
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