Uzbekistan enlists Gazprom in oil industry overhaul
Thursday, Nov 09, 2017
Uzbekistan has recruited Russia’s Gazprom to help it implement a US$2 billion plan to ramp up production of crude oil and natural gas dramatically over the next two years.

According to state media in Tashkent, Uzbek President Shavkat Mirziyoyev signed off on an ambitious five-year programme for developing the sector on November 3. Under the first stage of this plan, which will run until the end of 2018, a joint venture between Russia’s Gazprom and Uzbekistan’s Uzbekneftegaz, NaturalGas-Stream, has awarded contracts to two oilfield services providers linked with the former’s financial arm, Gazprombank.

The document signed by Mirziyoyev revealed that ERIELL, which is majority-owned by Gazprombank, had won tenders to drill 248 gas and 48 oil wells on a turnkey basis at fields belonging to Uzneftegazdobycha, an upstream division of Uzbekneftegaz. The company, set up in the Czech Republic in 1999, was also selected to repair another 328 existing wells as well as carry out other development work at the sites.

Meanwhile, another unit of Gazprombank, Singapore’s Enter Engineering, landed a contract for the construction of technical facilities at the fields.
According to Uzdaily, the document also showed that NaturalGas-Stream had signed a deal to borrow US$200 million for 12 months from Bank GPB International, a Luxembourg-based subsidiary of the Russian bank.

The first stage of Uzbekistan’s development plan is estimated to cost US$1.99 billion, of which US$1.48 billion will be drawn from foreign lenders and US$503.8 million will come from Uzbekneftegaz. Its aim is to lift national production by 6.35 bcm of gas, 114,720 tonnes (2,800 bpd) of gas condensate and 75,500 tonnes (1,500 bpd) of crude oil. This growth is expected to free up 3.45 bcm of gas for export.

NaturalGas-Stream was established at the end of 2016, shortly after Mirziyoyev was appointed as leader of Uzbekistan after the death of his predecessor, Islam Karimov. Under Mirziyoyev, Uzbekistan has strengthened ties with other former Soviet states in the energy sector, marking a change from the isolationist foreign policy of Karimov.

The leader’s approval of the new development plan coincided with a two-day visit to Tashkent by Russian Prime Ministry Dmitry Medvedev, which resulted in a raft of energy deals being signed.

Gazprombank signed a memorandum of understanding (MoU) to lend US$500 million to a Russian-Uzbek joint venture tasked with building an oil refinery in the eastern Uzbek region of Jizzakh. Slated for completion by 2021, the refinery will produce 3.7 million tonnes of motor fuel, 700,000 tonnes of aviation kerosene and 300,000 tonnes of associated petroleum products per year. It will be fed with Russian oil via a planned pipeline running from the Uzbek-Kazakh border. Total investments in the project are estimated at US$2.2 billion.

Meanwhile, the Russian Export Center signed an agreement with Uzbekneftegaz on financing construction of a gas-to-liquids (GTL) plant at the Shurtan Gas Chemical Complex in southern Uzbekistan.
In another encouraging sign for Uzbekistan’s energy sector, the country may soon resume gas exports to Tajikistan following a hiatus lasting several years.

Asia-Plus cited an official at Tajik pipeline operator Tajiktransgaz as saying on November 7 that a provisional deal on deliveries had been clinched during recent talks in Tashkent.

Uzbekistan halted shipments to its Central Asia neighbour in 2012, after rising local demand eroded its surplus available for sale overseas. Tashkent and Dushanbe had locked horns for several years prior to this over gas debts, with the Uzbek government criticised for using the supplies as a diplomatic weapon.

The price of new deliveries has not yet been fixed, although the source at Tajiktransgaz claimed it would be considerably lower than average global rates.
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