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Energy

Uzbekistan and SOCAR Advance $2 Billion Ustyurt Energy Project

Uzbekistan’s Minister of Energy, Jorabek Mirzamahmudov, has outlined the country’s deepening energy cooperation with Azerbaijan’s state oil company SOCAR, highlighting progress on a recently signed Production Sharing Agreement (PSA) for the Ustyurt region and broader plans in petrochemicals and electricity trade. In an interview with Azerbaijani media outlet Report, Mirzamahmudov confirmed that Uzbekistan, SOCAR, and Uzbekneftegaz have already established a joint operating company to oversee the Ustyurt project. Fieldwork is expected to accelerate soon, with seismic surveys covering over 3,000 linear kilometers set to begin before year-end, followed by the drilling of the first exploration well. The PSA structure splits ownership equally between the state and investors, with SOCAR and Uzbekneftegaz as the primary partners. British energy major BP has shown interest and is in preliminary discussions to join the consortium. Azerbaijani President Ilham Aliyev stated in August that SOCAR had commenced work at an Uzbek oil field following the contract signing. He expressed optimism about potential discoveries within the next one to two years. Mirzamahmudov acknowledged that earlier data on Ustyurt had not suggested large hydrocarbon reserves but said that modern interpretation techniques have revealed greater potential. While refraining from early reserve estimates, he said SOCAR specialists are optimistic about promising oil indicators. If confirmed, Uzbekistan plans to build a new refinery. Total investment in the Ustyurt project is projected at around $2 billion. The minister said SOCAR and Uzbekneftegaz would finance the project’s initial stages, with BP possibly joining later. He did not rule out future collaboration with Azerbaijan on major fields like Shah Deniz or Absheron but emphasized that Uzbekistan’s current priority is increasing domestic production. In the long term, joint ventures in third countries are also being considered. Trans-Caspian Energy and Renewables Push Mirzamahmudov also discussed the proposed trans-Caspian high-voltage direct current (HVDC) cable project aimed at exporting renewable energy to Europe. A joint venture involving Azerbaijan, Kazakhstan, and Uzbekistan has already been formed. The Asian Development Bank is assisting in selecting a consultant for the project’s feasibility study. Several countries, including Saudi Arabia, have expressed interest. Uzbekistan currently generates more than 20% of its electricity from renewables and aims to increase that share to 54% by 2030. In the Ustyurt region alone, wind projects totaling over 2.5 GW are under development, with the first 100 MW already operational. The government also plans to deploy hybrid wind-solar-storage systems with a minimum capacity of 5 GW. Localization and Petrochemical Cooperation Mirzamahmudov noted that future oil and gas processing facilities could be localized in special economic zones in Bukhara, Karakalpakstan, and Khorezm, which are currently being evaluated for infrastructure and logistics readiness. A joint venture with SOCAR Trading is already exporting polymer products, and ongoing discussions aim to expand cooperation in fuel production and fertilizer manufacturing.

Finance

ADB Approves $300 Million Loan to Support Small Business Growth in Uzbekistan

The Asian Development Bank (ADB) has approved a $300 million policy-based loan to boost the development of micro, small, and medium-sized enterprises (MSMEs) in Uzbekistan, with a particular focus on women-led businesses. The bank announced the decision on November 12. Of the total funding, $100 million will be provided on concessional terms to expand access to finance for MSMEs and strengthen Uzbekistan’s microfinance sector. The loan forms part of the second phase of the ADB’s Inclusive Finance Sector Development Program, which builds on earlier efforts to improve the legal and institutional framework for inclusive finance in the country. Key reforms have included raising the ceiling on microloans, modernizing microfinance regulations, joining the Women Entrepreneurs Finance Code, and introducing frameworks for Islamic microfinance. “ADB is proud to support Uzbekistan’s transition to a more inclusive and market-based financial system,” said ADB Country Director for Uzbekistan Kanokpan Lao-Araya. “This program will help unlock access to finance for the self-employed and microentrepreneurs, promote gender equality, and strengthen consumer protection in the financial sector.” The latest phase of the program introduces new policy measures aimed at enhancing responsible lending, regulating emerging products such as “buy now, pay later” services, and strengthening digital financial supervision. It also advances gender equality by supporting sectoral policies that implement gender-based financing quotas and improve the reporting of sex-disaggregated data. An evaluation of Uzbekistan’s National Financial Inclusion Strategy (2021-2023) revealed that 60 percent of adults now hold accounts with formal financial institutions, a significant gain attributed to rapid digitalization. The new program aims to further modernize the microfinance sector by allowing the creation of deposit-taking microfinance banks, two of which have already received preliminary licenses. This year marks the 30th anniversary of ADB-Uzbekistan cooperation. Since 1995, the bank has committed $14.6 billion in loans, grants, and technical assistance to the country. Uzbekistan has also been selected to chair the ADB Board of Governors for 2025-2026. Samarkand is set to host the ADB’s 59th Annual Meeting in May 2026.

Climate Change

Central Asia Faces Billions in Climate Adaptation Costs, UNEP Warns

Central Asia ranks among the most climate-vulnerable regions in the world and will require tens of billions of dollars to adapt to the accelerating effects of global warming, according to a new report by the United Nations Environment Programme (UNEP). The report identifies Central Asia as one of the fastest-warming areas globally. However, current adaptation funding remains drastically insufficient to meet the growing threat. A Region Under Threat Developing countries worldwide, including those in Central Asia, will need up to $310 billion annually by 2035 to adapt to climate change. UNEP highlights the region’s specific challenges: rapidly melting glaciers, widespread soil degradation, worsening water scarcity, and increasing aridity, all of which endanger food security and energy sustainability. “If we don't start investing in adaptation now, we will face increasing costs every year,” said UNEP Executive Director Inger Andersen. Tajikistan and Kyrgyzstan are particularly exposed, with more than 70% of their populations employed in agriculture, which depends heavily on mountain rivers fed by glacial runoff. According to UNEP, glacier volumes in the region have shrunk by over 30% in the past decade. The changing flow of the Amu Darya and Syr Darya rivers threatens not only agriculture but also the hydropower sectors in both countries. Diminished access to water could lead to socio-economic instability in vulnerable communities. Funding Gap Widens UNEP estimates that developing countries in Europe and Central Asia need roughly $51 billion annually for adaptation. Yet, only a fraction of that figure is currently being met. Tajikistan, for example, has outlined total climate financing needs of $8 billion by 2030 and $17 billion by 2050. In Uzbekistan, the cost of modernizing irrigation and water management systems alone is expected to approach $10 billion by 2030. UNEP has urged governments in the region to accelerate the updating of national adaptation plans, many of which have not been revised in over a decade, and to enhance cooperation in the Amu Darya and Syr Darya basins. Priority areas include investment in irrigation infrastructure, early warning systems, and flood control. From Glaciers to Farms In response to UNEP’s findings, international organizations have begun to fund targeted adaptation initiatives. The Green Climate Fund, for instance, has approved $250 million for the From Glaciers to Farms program, spearheaded by the Asian Development Bank. The project aims to strengthen agricultural and water resilience in glacier-dependent countries in Central Asia, the South Caucasus, and parts of South Asia. It covers four major river basins: the Naryn and Panj in Central Asia, the Kura in the South Caucasus, and the Swat in Pakistan, benefiting approximately 13 million people. Funding will support the development of irrigation networks, reservoir construction, glacier monitoring, and early warning systems. The program also places a strong emphasis on empowering women entrepreneurs in agriculture and improving the financial sustainability of rural communities.

Glaciers

Glacier-Dependent Central Asian States to Benefit from ADB Climate Program

On October 29, the Green Climate Fund approved $250 million for Glaciers to Farms, a major adaptation initiative led by the Asian Development Bank (ADB) to build climate-resilient water and agricultural systems in glacier-dependent regions of Central Asia, the South Caucasus, and Pakistan. The funding, provided mostly as grants, will complement a broader $3.25 billion investment by ADB over the next decade. The program spans nine countries: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. These states rely heavily on glacier- and snow-fed rivers for agriculture, drinking water, and electricity. Accelerated glacial melt poses a direct threat to ecosystems and rural livelihoods, particularly in areas where one in four jobs depends on agriculture. By improving irrigation efficiency, expanding water storage, and investing in watershed management, the program seeks to reduce the growing frequency of droughts and floods linked to glacial melt. Glaciers to Farms will focus on four major glacier-fed river basins: the Naryn and Pyanj in Central Asia, the Kura in the South Caucasus, and the Swat in Pakistan. These basins cover about 27 million hectares and are home to an estimated 13 million people. The program will support glacier and climate assessments, upgrade monitoring networks, and introduce early warning systems to help communities prepare for glacial lake outburst floods and prolonged droughts. Beyond infrastructure, Glaciers to Farms will strengthen the capacity of local banks to finance agricultural enterprises, particularly those led by women, as part of its inclusive development approach. Climate-induced glacial retreat is a pressing concern for Central Asia, where glaciers supply up to 70 percent of river flows. The region contains more than 4,500 glacial lakes, many formed as a result of retreating ice. These lakes increase the risk of natural disasters such as lake outburst floods, avalanches, and landslides, threatening vulnerable mountain communities. Recognizing the urgency, the United Nations General Assembly has declared 2025 the International Year of Glacier Preservation. Tajikistan hosted the International Conference on Glaciers’ Preservation in Dushanbe in May, highlighting the region’s central role in global climate adaptation efforts.

Healthcare

ADB Approves $75M Loan to Boost Nursing Sector in Turkmenistan

The Asian Development Bank (ADB) has approved a $75 million loan and an additional $2 million grant from the Japan Fund for Prosperous and Resilient Asia and the Pacific to expand and improve the nursing and midwifery workforce in Turkmenistan. According to an ADB statement, this marks the bank’s first health sector project in the country. “The project aims to provide high-quality health services based on people’s needs and ensure equitable access to health care through strengthening the nursing profession and education,” said ADB Country Director for Turkmenistan Artur Andrysiak. He noted that this is ADB’s third project in Turkmenistan, reflecting a growing partnership as the Bank and the country celebrate 25 years of cooperation. The Turkmen government has prioritized healthcare reform, with a focus on improving the education and qualifications of health workers. Nurses, often the first point of contact in the health system, will be empowered to deliver both essential care and preventive services under the new initiative. Plans include the design and construction of a climate-resilient nursing school in Ashgabat, featuring state-of-the-art facilities such as clinical simulation labs, dormitories, a mother-friendly room, and an edible garden to promote nutrition. The project will also provide new medical and educational equipment and update curricula, teaching methods, and faculty training in line with international standards. The total project cost is estimated at $98 million, with the Turkmen government contributing $23 million in counterpart financing. The initiative builds on ADB’s growing cooperation with Turkmenistan in recent years. In August 2024, ADB adopted a new country partnership strategy for Turkmenistan covering 2024-2028. The strategy focuses on supporting the transition to a climate-resilient and sustainable economy, enhancing competitiveness through diversification and human capital development, and advancing structural reforms and institutional capacity.

Growth Forecasts

ADB Raises Kazakhstan’s Economic Growth Forecast, Warns of Higher Inflation

The Asian Development Bank (ADB) has revised upward its economic growth forecast for Kazakhstan for both 2025 and 2026, while also raising its inflation projections. The updated outlook was published in the July edition of the Asian Development Outlook. Growth Outlook Strengthened According to the ADB’s latest report, Kazakhstan’s GDP is now expected to grow by 5.1% in 2025, up from the 4.9% forecast issued in April. The projection for 2026 has also been increased from 4.1% to 4.3%. Key growth sectors include: Transport: +21% Construction: +16.9% Manufacturing: +8.7% Mining: +6.1% Particular emphasis is placed on the early expansion of oil production at the Tengiz field, which launched ahead of schedule. This, combined with Kazakhstan’s increasing oil exports within the framework of OPEC+ quotas, has bolstered the growth outlook. As previously reported by The Times of Central Asia, in June, Kazakhstan raised production for the third consecutive month, contributing positively to GDP growth. "Growth in tax revenues has allowed for increased government investment in capital projects and the social sector," the ADB commented. "The early launch of the Tengiz expansion has strengthened prospects for the extractive industry. OPEC+'s May 31 decision to continue raising production supports this trend, as Kazakhstan is utilizing its full capacity." Inflation Pressures Intensify Despite the improved growth outlook, the ADB now expects inflation to reach 10.2% by the end of 2025, up from the 8.2% forecast in April. For 2026, inflation is projected at 8.4% (previously 6.5%). Data from Kazakhstan’s National Statistics Bureau indicates that annual inflation reached 11.3% in May and 11.8% in June. Paid services remain the primary inflation driver, though monthly price increases slowed modestly from 0.9% in May to 0.8% in June. The ADB notes rising inflationary pressure across the broader Caucasus and Central Asia subregion. The regional average is now expected to hit 7.8% in 2025 and 6.7% in 2026 both higher than the previous forecasts of 6.9% and 5.9%, respectively. Supporting Forecasts The Eurasian Development Bank (EDB) also anticipates robust economic expansion in Kazakhstan, projecting GDP growth of 5.5% in 2025, up from 4.8% in 2024, with sustained momentum through 2026-2027. However, the EDB likewise foresees persistent inflation, expecting it to reach 11.9% by year-end. Earlier, Deputy Prime Minister Serik Zhumangarin reported that the Kazakh economy grew by 6.2% in the first half of 2025, the country’s fastest growth rate since 2011.