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Last Updated: Thursday, 10 November 2005, 11:07 GMT
Uzbekistan 'facing oil crisis'
By Ian MacWilliam
BBC News, Tashkent

A consumer pumps gas into his car at a BP station in Highland Heights, Ohio on Wednesday, Nov. 9, 2005.
Global oil price rises are exacerbating the Uzbek problem
Uzbek businessmen say the country's oil shortages will continue to worsen unless the government gives up its monopoly control over the oil industry.

Most of the country is already short of petrol.

Recent rises in world oil prices may be bringing Uzbekistan's oil problem to a crisis.

But as so often in Uzbekistan, the authorities have pulled a veil of secrecy over what is happening in the oil business.

While motorists throughout the country have been queuing for scarce petrol for weeks, the government insists that nothing is wrong.

Only the capital, Tashkent, is usually protected from what appears to be a worsening fuel crisis.

Private businessmen involved in the oil industry say a major cause is the government's insistence that Uzbekistan should be self-sufficient in oil.

While it has oil reserves, mostly in the west, they are not sufficient for the country's needs. But critics say officials exaggerate production figures to suggest they are.

New technology could boost production, they say, but instead, cost-cutting and poor management have led to the rapid exhaustion of oil fields. Many Uzbek oil experts have left to work in Kazakhstan or Russia.

Bad prospects

Economists say Uzbek oil production is falling by about 20% a year, so the current deficit can only get worse.

Uzbekistan needs to import oil, but the government cannot afford to, especially at current high world prices, and will not admit it needs to.

Private businessmen rarely speak publicly to avoid government reprisals.

But increasingly, they say the only solution is to end the government monopoly where the authorities set petrol prices, control distribution and restrict imports.

Neighbouring Kazakhstan and Kyrgyzstan already have a free market in oil.

Economists say that ending rigid government controls in Uzbekistan would rapidly enable private suppliers to fulfil the country's oil needs at market prices.

The Russian company Lukoil has been signing deals to explore for more oil around Uzbekistan's portion of the Aral Sea. But analysts say these Lukoil deals are really political, not economic, aimed at reviving ties between Uzbekistan and the Kremlin.


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