TOPIC OF THE WEEK: Uzbekistan's natural gas trade deficit worsens significantly in 1H24
Uzbekistan transitioned into a net gas importer status in 2023. We have analyzed in detail the reasons for that phenomenon elsewhere, stressing the strong structural underpinnings of this transition, but the full trade data for the first half of the year allows us to evaluate the evolution of net gas imports since last year.
The data shows that the trade deficit in natural gas has grown significantly in 1H. It widened to US$567.7mn, thus tripling relative to the whole of 2023. Moreover, gas imports alone amounted to US$ 809mn, which is 4 times more than that posted in the first half of 2023, when the value of deliveries were only US$200mn. This also exceeds gas imports for the whole of 2023 (US$694.9mn).
The external picture, therefore, remains challenging for Uzbekistan, although other factors, including lower gold exports, have contributed to the challenge. At the same time, stronger-than-expected remittances and higher gold prices have boosted FX reserves, rendering Uzbekistan the country with the largest improvement in FX reserves in our universe of coverage in the first half of the year.
Still, the sharp deterioration of the gas trade balance in 1H and the prospects of significant further ramping up of gas imports over the next 5 years suggest that external risks will continue to be present and need to be monitored.
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