Is Uzbekistan Becoming a Regional Gas Supply Risk?

This starts with a supply problem

• If you look at what is happening on the ground, it is becoming hard to argue that Uzbekistan has enough gas to get through winter comfortably. People are waiting for hours at methane stations, some stations are closed for days at a time, and the fixes that were promised, such as mobile gas containers, have not actually been delivered. When people begin protesting outside gas offices, as they did on 24 December, it suggests to me that the causes go beyond normal seasonal pressure and point toward something more persistent.

• You may agree with that, or you may not, but the production numbers broadly support this view. Gas output fell by another three hundred million cubic metres in November, and over the course of the year more than two billion cubic metres of supply has been lost. New fields were meant to slow this decline and buy time for the system to adjust, but that has not happened. Taken together, it becomes difficult to describe this as just a bad winter, and much easier to see it as a structural supply issue.

What tight supply actually changes

• When gas supply tightens, the way the system behaves begins to change. The focus moves away from optimising for cost and efficiency and shifts toward maintaining continuity and avoiding social stress. Instead of asking how gas should be allocated most efficiently, the priority becomes reducing political and social risk. Residential demand effectively becomes non negotiable, especially in winter, as cutting household supply quickly leads to public backlash, which we are already starting to see.

• In that environment, exports do not need to be formally cut for effective supply to fall. What usually deteriorates first is reliability. Flows become less predictable, delivery schedules stretch, and volumes arrive later or in smaller tranches than expected. From a modelling perspective, this reduces usable supply even if contracted volumes remain unchanged on paper. For neighbouring systems that rely on steady winter inflows, this gradual loss of reliability can tighten balances much faster than headline numbers would suggest.

• Price adjustment under these conditions tend to occur in more subtle/covert ways. Regulated tariffs keep the official price anchored, but scarcity creeps in through rationing, shorter operating hours, long queues, and lost labour time. These are all shadow prices that raise the true cost of gas consumption without appearing directly in the data. Over time, this distorts demand signals and delays the investment response that would normally help ease the problem.

How those pressures propagate through the system

• Once supply is constrained, industry tends to absorb the first round of adjustment. Gas intensive sectors such as fertilisers, power generation, and heavy manufacturing respond through lower utilisation rates, fuel switching, or temporary shutdowns. This is where demand destruction starts to appear, although it is often uneven and not always permanent.

• That unevenness matters when trying to understand demand patterns. Aggregate demand may look weak in one period not because underlying need has fallen, but because activity has been pushed down by constraint. When supply partially improves, demand can rebound quickly as deferred activity resumes. This leads to more volatile load profiles and makes forecasting more difficult, particularly in winter when the system has limited flexibility to absorb swings.

• At the same time, expectations begin to change. Once users and buyers are no longer confident that gas will be available when needed, behaviour starts to change on its own. Inventory targets rise where possible, tolerance for low buffers falls, and reaction times shorten. As a result, the system becomes more sensitive to shocks, meaning that disturbances which would previously have been absorbed can start to generate larger price and flow responses than historical relationships would imply.

What we think at Cordoba

• We think the importance of this situation is still being underestimated. The production decline looks structural rather than temporary, and structural declines tend to matter because they do not resolve themselves within a single season. Over time, they change behaviour, and when supply cannot respond quickly, the system naturally runs tighter.

• For gas markets, this means Uzbekistan needs to be treated differently in regional models. It should no longer be assumed to act as a relatively steady balancing source. Instead, it increases the likelihood that regional supply runs closer to constraint during winter periods, which reduces slack and raises price sensitivity across the system.

• When buffers are thin, gas markets tend not to adjust gradually. Small disruptions that would normally be absorbed, such as a cold spell, a logistical delay, or routine maintenance, begin to carry more weight, and pricing can move further and faster than expected even without a formal supply shock.

• This kind of slow, structural tightening is often misread because there is no single moment that forces a reassessment. The adjustment usually happens through behaviour rather than announcements. But over time, it leads buyers to pay more for reliability, flexibility, and certainty. When winter demand, political priorities, and limited supply capacity align, pricing can adjust in ways that catch consensus off guard.

• We would thus position for tighter winter balances, with a bias toward upside in regional gas pricing and volatility rather than assuming quick supply relief. The risk-reward looks skewed toward higher prices and more non-linear moves as the system continues to run close to its limits.