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2 Sep, 2008 17:23

Russia and Uzbekistan agree hike in gas price

Russia has agreed new gas prices with Uzbekistan and plans to build a pipeline in the central Asian country. The deals were reached at a meeting between Russia's Prime Minister Vladimir Putin and Uzbek President Islam Ka

Uzbek gas will be exported to Russia at market value, matching the price paid by Europe, but excluding Gazprom's commission and the cost of transporting the gas.

Last year Gazprom imported Uzbek gas for $US 100 per 1,000 cubic metre, but this year is paying $US 160. As a consequence, Gazprom's export price to Europe will also rise.

Russia is striving to maintain its economic and political influence in the Central Asian republic in the face of strong competition.

Vladimir Putin brought some of Russia’s top business leaders with him. They came away with a deal that will see Russia pay significantly more for Uzbekistani gas.

But the construction of a new pipeline means Moscow will remain Tashkent’s main energy partner.
“Some may have the impression that there are problems with transporting gas from Central Asia. Such speculations are circulated by those who wish to create panic and use it to promote alternative projects,” President Karimov said.

Further co-operation agreements in areas as diverse as space exploration and nanotechnology were signed. But although the turnover between the countries is growing, the value and number of big joint projects is limited.

While Vladimir Putin’s visit was about economics, politics was never far away. Russia’s decision to recognise South Ossetia and Abkhazia has not been openly supported by any former Soviet republics. Indeed, a recent meeting between highly-placed American and Uzbekistani defence officials indicated that Tashkent may be ready to renew its military partnership with the US.

Putin’s visit was intended to explain Russia’s position, and reassure its ally.

Last month’s conflict between Georgia, its breakaway republics and Russia remained the hot issue for the Prime Minister. Vladimir Putin refuted claims that Russian forces were still in Georgia proper, saying that only peacekeepers remained in the buffer zones.

He also criticised Georgian President Mikhail Saakashvili, labeling his regime undemocratic. He had softer words for the European Union, which refused to apply sanctions to Russia over the dispute.