CAPITAL: Bishkek

MONETARY UNIT: Som

REFINING CAPACITY: 10,000 b/cd

OIL PRODUCTION: 1,000 b/d

OIL RESERVES: 40 million bbl

GAS RESERVES: 200 bcf

The Kyrgyz government indicated its desire to reduce the nation`s dependence on energy imports.

It appeared, however, that the only viable option was development of hydroelectric potential. In 1999, hydroelectricity met one fourth of Kyrgyzstan`s total energy requirements, though it was believed that more could be achieved given sufficient capital.

Economy and government

While Kyrgyzstan remained among the poorest of the former Soviet states, the Kyrgyz economy was improving. In 1996, it experienced its best year since the collapse of the Soviet Union.

In addition to real GDP growth of 2%, the country`s budget deficit was reduced from 12.8% of gross domestic product in 1995 to an estimated 6% in 1996. But Kyrgyzstan had great difficulty attracting foreign investment, while politically the country was threatened with destabilization by the Tajikistan civil war, growing social unrest, and divisions between the country`s ethnic Uzbek and Kyrgyz populations.

In the face of its economic and political problems, Kyrgyzstan had tilted back towards Moscow, particularly in the economic sphere. Among other measures, Kyrgyzstan on Mar. 29, 1996, joined a customs union with Russia, Kazakhstan, and Belarus.

Kyrgyzstan depended heavily on Soviet economic subsidies, which it lost when the Soviet Union fell apart. Kyrgyzstan partly recovered this loss through financial assistance from the World Bank and the International Monetary Fund.

Since Soviet subsidies to Kyrgyzstan represented about 12% of the country`s GDP, the economy suffered severely when these funds were removed. Among the more damaging was the sudden removal of fuel subsidies, which seriously hurt industrial activity.

Upstream developments

Kyrgyzstan in 1999 had seven developed oil fields and two oil and gas fields.

Because of difficult geological structures and water encroachment, recovery rates were low.

Kyrgyz natural gas satisfied only a tiny portion of domestic demand. The country relied heavily on imports. In the northern region, gas moves through the Bukhara-Tashkent-Bishkek-Almaty pipeline.

Natural gas reaches the southern region of Kyrgyzstan from Turkmenistan and Uzbekistan. Uzbekistan`s decision to charge world prices for its natural gas exacerbated an already difficult payment situation for Kyrgyzstan.