Forum Highlights Central Asia’s Energy Future

By Steven Shin

The Third Central Asia Regional Economic Cooperation Program (CAREC) Energy Investment Forum (EIF) was hosted on September 11 to highlight Central Asian energy investment opportunities for the private sector, according to Radio Free Europe/Radio Liberty (RFE/RL). The two-day event took place in Batumi, Georgia and was attended by officials from the 11 CAREC member countries along with representatives from various energy-related industries.

In order to secure a stable energy supply, Central Asian countries need $94 billion of public investment and $38 billion from the private sector in the next five years, according to a 2016 Asian Development Bank (ADB) report.

During the sessions, project developers showcased recently completed high technology projects, and a panel of experts assessed the readiness of the CAREC region to implement a similar project while potential investors watched from the audience.

The forum emphasized four green industries in particular: solar power, battery-based storage, energy efficiency, and electric vehicles. These were highlighted because of their potential as revolutionary energy technologies.

Another focal point in the EIF was the trade of natural gas regarding the Caspian Sea Agreement, according to the 2016 ADB report. Experts from Turkmen Gas were brought-in to present the implications of this agreement, which divided ownership of resources found in the Caspian. The five bordering countries, Azerbaijan, Turkmenistan, Iran, Kazakhstan, and Russia signed the agreement on August 12 in Kazakhstan, after over 20 years of negotiations.

The Caspian Sea contains significant energy resources, including over 50 billion barrels of oil and nine trillion cubic meters of natural gas. The debate revolves around the Caspian’s designation as a sea or lake because each has different laws on territorial ownership under the UN Convention on the Law of the Sea, reports Stratfor.

Central Asian economies depend heavily on energy. Kazakhstan, for instance, relies on oil for 50 percent of its GDP. These countries suffered significantly from the 2014 oil crash and have subsequently accelerated their development of renewable energy. According to the Diplomat, Kazakhstan aims to source 50 percent of its energy from renewable sources by 2050.

However, the move toward renewable energy is not without significant controversy. The Diplomat notes that Tajikistan relies primarily on hydroelectric dams, and the proposed construction of the Rogun dam has been a sore point in Tajik-Uzbek relations. Uzbekistan claims the dam will choke waterflow into the landlocked country. The Rogun dam cuts across the Vakhsh river, which drains into Uzbekistan.  

Kazakhstan provides heavy subsidies on electricity to its domestic market, and the switch from its abundant oil resources to renewable sources may threaten these subsidies, which would be unpopular. According to the Financial Times, recent attempts to reduce them have marred the stable reign of dictator Nursultan Nazarbayev.