Uzbekistan’s oil and gas industry expands investments attraction

The report, as well as others from the company, prepared based on reports of local media, data of the State Statistics Committee of Uzbekistan and analysis and calculations of AFS-Research.

Oil and gas industry is one of the important sectors of Uzbekistan’ economy. It is enough to say that energy resources and oil products are one of important export items of Uzbekistan. In 2009, share of these products in Uzbekistan’s export made up 34.2%, which significantly rose compared to 24.7% in 2008.

In 2009, about 21.5% of all industrial output of Uzbekistan was produced by fuel industry. Almost one fourth of all gas reserves in Central Asia and Kazakhstan fall to share of Uzbekistan. Uzbekistan is the eighth place on gas reserves in the world.

This year, oil and gas sector of Uzbekistan will continue to attract significant volume of foreign investments. Russia’s Lukoil is planning to invest US$480 million into Uzbekistan in 2010. Overall, Russian oil company plans to direct about US$5 billion by 2015, increasing gas production from 3 billion cubic meters to 16 billion cubic meters a year.

Currently, Lukoil participates in several projects in Uzbekistan. The company currently carries out seismic works in Aral and already started gas extraction within Kandym-Khauzak-Shady project with reserves for over 300 billion cubic meters.

Vietnam’s Petrovietnam is planning to expand exploration in Uzbekistan from 2011 due to studying of new oil and gas fields. Petrovietnam and Uzbekneftegaz national holding company signed a memorandum of understanding on Bukhara-Khiva oil and gas region in 2010.

On 29 January 2010, Petrovietnam and Uzbekneftegaz signed an agreement on conducting exploration works within five years at Kosor investment block in Ustyurt with 5,500 square meters area. The size of minimal investments to explorations will make up US$30 million. It is expected that exploration works will start in the second half of 2010. On 5 April 2010, Petrovietnam opened its representative office in Tashkent.

China National Petroleum Corporation (CNPC) will invest US$211.7 million into development of Mingbulak oil field in Namangan region of Uzbekistan in 2010-2014.

During five years, the Chinese company will invest the above-mentioned sum to exploration and experimental-industrial extraction of hydrocarbons at the firld.

CNPC and Andijanneft OJSC, part of Uzneftegazdobicha created a joint venture Mingbulakneft in June 2008. The venture is operator of the project and its announced charter capital is US$3 million.

All extracted oil from Mingbulak field will be processed at the oil processing plants in Uzbekistan. Mingbulak field was opened in 1992 and total reserves are about 2 million tonnes, according to Uzbekneftegaz.

Uzbekistan successfully develops oil and gas infrastructure. Asia Trans Gas, an Uzbek-Chinese joint venture, is planning to complete construction of the second line of the Turkmenistan-China gas pipeline in September-October 2010. The venture was created by Uzbekneftegaz and CNPC. It was founded to design, construct and exploration of the Uzbek part of the Turkmenistan-China gas pipeline/

AFS Research expects that in mid-term perspective oil and gas industry of Uzbekistan will keep its leading role in the economy of Uzbekistan. The company expects that 23-25% of industrial output will fell to share of oil and gas sector in 2010-2012. Its share in exports will make up 35-38% in the reporting period.

Vycheslav Luchkin,
leading financial analytic of AFS-Research.

AFS–Research is investment company, providing wide-scale services for work in capital market. Main directions of activity are investment analytics, investment-banking services and investing consulting. Company web-site: www.afs-research.com.