Mr Putin visits that nice Mr Karimov for a chat about this and that and oil and gas and pipelines

Whilst problems rise in Ingushetia ,Vagit Alekperov called to tell us of his trip alongside Prime Minister of Russia, Vladimir Putin, to Uzbekistan yesterday. They were met personally at the start of their 2 day visit yesterday at Tashkent International Airport by "boil in bag" Islam Karimov himself.

Vagit tells us that Head of the Russian Government Mr Medvedev was dragged along in the wake , as were the Chairman of the Board of Gazprom, Aleksey Miller, and the Head of the United Aircraft Construction Corporation, Aleksey Fedorov, and also the representatives of some other big noises from the St Petersburg mafia.

In return for paying "European" prices for Uzbek gas Putin hopes to get Karimov to agree to keep US bases off his soil.

This high powered delegation also wants to get back on track the deals sought during the meetings last week between Russia’s Vice Premier Sergei Ivanov and Uzbek First Vice Premier Rustam Azimov including privatising / stealing certain hydroelectric power stations that are of interest to Anatoly Chubais's - Inter RAO/UAS who had tagged along. They also want to re-visit the stalled plans for a merger/joint venture of Russia’s Stroitransgaz and Mubarek GPZ .

Karimov however wants to cash in on a window of new found acceptance of his mass slaughter of civilians at Andijan so is, as usual playing both ends against the middle.

Vagit tells us that Moscow will offer long-term contracts for all Uzbek gas (with a modest commission for Mr Karimov and his extended family) . Uzbekistan produces 60 billion cu meters of gas a year, and gazprom takes probably 7/8 Bn. cu meters .

Russia was paying US$130/per thousand cu meters in the first half-year, but the price went up to US$160/ths cu meters in the second half.

The big idea is however to get Karimov to sign up for a new pipeline to Russia,boosting annual capacity of Central Asia-Center facilities from 45 billion cu meters to between 80 /90 billion cu meters.

All this must be seeen in the context of Russia's long term plans : -

Currently , the total volume of Russian investments in the oil and gas sectors in the countries of Central Asia is US$4-5 Bn. Most (US$3-4 Bn.) > 80% is concentrated in Kazakhstan the share in Uzbekistan is smaller > US$1 BN and even less in Turkmenistan, Tajikistan and Kyrgyzstan maybe US$50 Mn.

Russian companies (and this is where Vagit gets involved) aim to invest approximately between US$ 14-16 Bn over the next five years (ish) mainly in the search for and development of oil and natural gas fields throughout Central Asia, but also in the pipeline infrastructure of the region. By 2012, Russia proposes investing US$ 4.7 to 6.2 Bn. into the oil and gas sectors of Uzbekistan on geological surveys and opening of oil and gas fields projects as well as upgrading the pipeline infrastructure.

The appeal of Central Asia to Russia is that extraction of hydrocarbons in the region is technically simpler and initially economically more advantageous than in the north of Russia where the overwhelming majority of Russian oil and gas fields are now concentrated.

Russia wants (needs) to bring as large a part as possible of the hydrocarbon resources of Central Asia into its own fuel-energy balances in order to support internal consumption, without simultaneously lowering the volumes of its own hydrocarbon exports to external markets - first and foremost to Europe.

Therefore this trip is very important, and perhaps the events in Georgia are meant as a reminder to Mr Karimov that Mr Putin can play hard ball when required.

PS : On this note Vagit did say that although LUKOIL, with four refineries in Russia, one in Ukraine, one in Bulgaria and one in Romania. LUKOIL, and has more operations abroad than any other Russian oil firm is worried that the Georgian trip may cause problems - especially the 49 % of ERG SpA's Isab di Priolo refinery in Sicily recently.

Oil closed at US$104.