Uzbekneftegaz and Korean companies consortium sign agreement on Ustyurt Gas Chemical Complex construction

Oil&Gas Materials 12 February 2010 15:11 (UTC +04:00)

Uzbekistan, Tashkent, Feb. 12 / Trend D. Azizov /

The Uzbek government and the consortium of Korean companies led by Kogas signed an investment agreement on construction of Ustyurt Gas Chemical Complex on the field Surgil, the Uzbek government said.

The document was signed during the state visit of Uzbek President Islam Karimov to the Republic of Korea on February 10-12.

It was reported that in February 2008, Uzbekneftegaz and Korean consortium consisting of KOGAS, Lotte Daesan Petrochemical Corp., LG International Corp., SK Gas and STX Energy created a joint venture on a parity basis UzKorGasChemical to realize the construction project of Ustyurt Gas Chemical Complex.

The original project cost was estimated at $1.85 billion, and then was increased to $2.4 billion. According to recent data, the project cost is estimated at $3.3 billion.

In early October 2009, it was reported that the commissioning of Ustyurt complex can be postponed until 2014 due to lack of accurate assessment of reserves at the field Surgil and rise in price of the project by nearly 40 percent over the past year and a half.

In 2008, the Korean Samsung Engineering and UzLITIneftegaz (Design Institute, part of Uzbekneftegaz) developed the technological part of the OTEC project for the construction of the complex with the processing of 4.5 billion cubic meters of gas and the organization of production of 400,000 tons of polyethylene and 100,000 tons of polypropylene per year.

In accordance with the schedule, the launch of the first stage of the complex is scheduled for November 2011. The complex must reach the design capacity by late 2012.

The project is expected to be financed owing to the foreign investments and loans, drawn by a consortium of Korean companies to the amount of $1,694 billion, own funds of Uzbekneftegaz worth $ 1.21 billion and credit of the Fund for Reconstruction and Development to the amount of $ 350 million.

This is the second complex, which will be built in Uzbekistan. In 2001, Shurtan complex was put into operation in the Republic in 2001. The technology of the complex is designed to produce 150 kinds of polyethylene of high, medium, and linear low pressure.

The design capacity of the complex is 125,000 tons of polyethylene per year. About 137 tons of liquefied gas, 130,000 tons of light condensate, and 4.2 billion cubic meters of marketable gas and 4,000 tons of sulfur are produced annually at the enterprise.

Deposit Surgil was opened just over two years ago. It is currently being developed by Uzbekneftegaz. Its reserves amount to about 120 billion cubic meters of gas. Natural gas of Surgil field contains a large number of valuable components, in particular, 4.8 percent of ethane.

It is assumed that the valuable products will be extracted from gas. Afterwards, purified gas will be supplied to the gas transmission system and sold for export.

Currently, an international expert company DeGolyer & MacNaughton conducts an audit of natural gas and gas condensate from the field Surgil and deposits in the Ustyurt region, which were transferred to the Uzbek side to expand the resource base of the complex.

Ustyurt oil and gas region is one of the largest in Uzbekistan and the least studied. Promising area of land is 105,100 square kilometers. Prospective Gas Resources are estimated at 1,685 trillion cubic meters, liquid hydrocarbons - in 1, 720 billion tons.

In recent years, about 30 oil and gas, including such large as Karazhanbas, North Buzachi, Kalampas are open.

Uzbekistan occupies the second place among CIS countries after Russia's natural gas production. Every year about 60 billion cubic meters of gas are produced in the country.

Uzbekneftegaz is a monopoly operator of oil and gas industry of Uzbekistan. It was established in 1998 and comprises six joint stock companies.

In 2009, Uzbekneftegaz reduced the production of natural gas to 3.8 percent - up to 61.408 billion cubic meters.