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    Kyrgyzstan Seeks Cut in Russian Gas Price


Bishkek says it is hopefully of a positive response.

by: Joseph Murphy

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Kyrgyzstan Seeks Cut in Russian Gas Price

Kyrgyzstan has asked Russia's Gazprom for a cut in gas prices, citing the economic shock of the Covid-19 pandemic, its deputy prime minister Erkin Asrandiev said in a meeting on May 11.

The central Asian country is among several former Soviet states heavily reliant on Gazprom's gas that have asked for cheaper supplies, but the Russian firm is yet to offer any concessions.

"The spread of the coronavirus infection, a decrease in business activity and the devaluation of the national currency has led to a decrease in the purchasing power of the population," Asrandiev told officials, according to a government statement. "Therefore the Kyrgyz side has asked to reconsider the issue of natural gas prices. Of course this question cannot be solved overnight, but we hope for a positive response."

Gazprom acquired Kyrgyzstan's national gas supplier in 2014 in return for assuming its debt and making a token payment of $1, going on to rebrand the enterprise as Gazprom Kyrgyzstan. Gazprom supplies the business with gas from Kazakhstan, with shipments totalling 0.30bn m3 in 2018, according to the Oxford Institute for Energy Studies (OIES).

Gazprom Kyrgyzstan charges residential consumers in the country som 15,300 ($197)/'000, and industrial users som 18,700/'000 m³, although the rates are changed on a monthly basis to account for adjustments to the official som-to-US dollar exchange rate set by Kyrgyzstan's central bank.

Gazprom expects a steep drop in exports this year due to the demand destruction caused by the Covid-19 pandemic, and projects its average gas sales price abroad to plunge to $133/'000 m3 from $211 in 2019. Belarus, which gets Russian wholesale gas at $127/'000, said in April it had asked for a price cut, and Armenia and Moldova have made similar requests.

The Kyrgyz gas market is heading for an expansion thanks to ongoing gasification work by Gazprom. There are also increasing calls for some coal-fired power plants to be switched to gas. Kyrgyzstan has no alternatives to Gazprom's supply, as the Russian company controls the pipelines that flow Kazakh gas into the country, save for a small amount of gas it imports from Uzbekistan.

This helps explain Bishkek's enthusiasm for Line D, a long-delayed project to add a fourth 30bn m3/yr line to the Central Asia-China pipeline that would run from eastern Turkmenistan through Uzbekistan, Tajikistan and Kyrgyzstan to northwest China. But despite Tajikistan and Kyrgyzstan both claiming progress, China has lost interest in Line D as a result of weaker-than-expected growth in gas demand. It is likely to push ahead with the project eventually, as its imports continue to rise, but its launch is unlikely until the mid- to late-2020s.