Status of Uzbek oil, gas and pipeline projects

Uzbekistan, Tashkent, Dec. 14 / Trend D. Azizov /

The recoverable proven hydrocarbon reserves in Uzbekistan hit 2.5 million tons of standard fuel in late 2011.

About 65 percent fall to gas reserves.

About 10 new areas were involved in exploratory drilling by Uzgeoburneftegaz in January-September.

About 52 wells were constructed.

Two new fields, Sherkent and Sagirtau, were discovered as a result of exploration.

About 4 of 17 drilled exploratory wells were delivered to industrial exploitation. About 26 wells were repaired.

According to the State Statistics Committee, Uzbekistan decreased liquid hydrocarbon production by 7.2 percent up to 2.897 million tons in January-October compared to the same period in 2010.

In particular, oil production fell by 8.8 percent to 1.556 million tons and gas condensate by 5.2 percent to 1.341 million tons in January-October.

Natural gas production has dropped by 4.1 percent to 51.33 billion cubic meters since early 2010.

According to some experts, as of 2011, the downward tendency of oil and gas production will be preserved. Taking into account the current production volumes, Uzbekistan is provided with proven natural gas reserves for 31 years, oil - for 20 years, condensate - for 25 years. Uzbekistan ranks eighth in the world in natural gas production.

The explored gas reserves hit 2.44 trillion cubic meters, of which 1.89 trillion cubic meters fall to free gas, the remaining volume - casing-head gas, that is dissolved in oil and contained in gas caps of the oil fields.

According to the national holding company, about 232 hydrocarbon deposits, of which 183 - gas fields were discovered as of 2011. About 103 of discovered fields are under development, 60 - were prepared for development. The exploration operations are conducted at 69 fields. At present, about 44 blocks were allocated for foreign investors to conduct exploration operations.

The Uzbek territory is divided into five oil and gas regions. At present, there are five oil and gas regions in Uzbekistan: Ustyurt, Bukhara-Khiva, Surkhandarya, Gissar and Fergana. The area of five oil and gas regions is 208,900 square kilometers.
The prospective gas resources only in the Ustyurt region are estimated at almost 2 trillion cubic meters, liquid hydrocarbons (oil and gas condensate) - about 900 million tons. The reserves of "blue fuel" in Ustyurt are expected to hit more than 1 trillion tons in the long term prospect (25 years). The figure will hit about 60 percent of the total projected increase in natural gas reserves in the country.

Russian comapny "Lukoil" is the largest investor in the field development. The company develops the fields of Kandym group, Khauzak and Shady. It carries out exploration at the Kungrad site, Ustyurt, produces hydrocarbons in the South West Gissar. The cost of "Lukoil" Uzbek projects - $ 4.3 billion and their implementation will ensure the annual production of 15 billion cubic meters of gas and 51,400 tons of oil.

Malaysian "Petronas" ranks second on the number of projects and the volume of investments.

The company received a license for 35 years taking into account a five-year exploration period within the Production sharing agreement (PSA) between "Uzbekneftegaz" and Petronas to develop three fields - Urga, Kuanysh and Akchalak group in the Ustyurt region. The company's investment in the project will amount to $ 500 million by 2014. The subsidiary company - Petronas Carigali (Urga) Operating Company was established to fulfill the operations.

In September 2010, Uzbekneftegaz and Petronas signed a protocol on entering the production sharing agreement (PSA) on the Baisun Investment Block into force in Surkhandarya region for 35 years. The design capacity of gas production will hit 2.5 billion cubic meters within the project.
Petronas has carried out 2D and 3D field seismic surveys, testing the wells in the field Gadzhak and interpretation of the obtained data worth $ 80 million. As a result of these tests, the State Committee on Reserves at the Uzbek State Committee on Geology and Mineral
resources approved the amount of reserves in the deposit.

The preliminary cost of the project was originally estimated at $660 million. At present, the figure hits $1.527 billion.

Uzbekneftegaz, South African Sasol Synfuels International (Pty) (Sasol) and Petronas International Corporation (Petronas) signed a trilateral investment agreement and a project agreement to build a synthetic liquid fuel plant on the basis of Shurtan Gas Chemical Complex (Kashkadarya) in September 2011. The plant will process 3.5 billion cubic meters of gas and produce 672,000 tons of diesel oil, 278,000 tons of air fuel, 361,000 tons of naphtha and 63,000 tons of liquefied gas. The GTL plant with a preliminary cost worth 2.739 billion is planned to be constructed in 2017.

Petronas left the international consortium carrying out exploration in the Uzbek part of the Aral Sea under a production sharing agreement (PSA) in May 2011. After Petronas's leaving, its share was distributed equally among other members of the consortium - "Uzbekneftegaz", "Lukoil Overseas", the Korean KNOC and Chinese CNPC;

PSA for the Aral block was signed in 2006. It consists of two parts: exploration (the license was issued to the operator - "Aral Sea Operating Company" joint venture for five years) and the subsequent development of the discovered hydrocarbon reserves with a validity of 35 years. The project was launched on January 31, 2007.

According to "Uzbekneftegaz", more than 30 anomalies connected with the oil and gas facilities may occur within the 12,500 square meter area of the Uzbek part of the Aral Sea.
The National Holding Company "Uzbekneftegaz" is the monopoly operator of the Uzbek oil and gas industry.

"Uztransgaz" company controls the activity on gas transportation and supply in Uzbekistan.
"Uztransgaz" company is Uzbekneftegaz National Holding Company's subsidiary.
Natural gas is delivered to consumers through a developed system of main gas pipelines. The total length of one line is more than 13,000 kilometers.
The separate parts of powerful gas transportation systems "Central Asia-Center" and "Bukhara-Ural", intended for natural gas transit and export have been laid in the north-west of the country.

The gas pipeline "Central Asia-China" was put into operation in December 2009. Its total length is about 7,000 kilometers, diameter - 1,067 mm, capacity - up to 40 billion cubic meters of gas per year.

Its length through the territory of Turkmenistan is 188 kilometers, Uzbekistan - 525 kilometers, Kazakhstan - 1,293 kilometers, China - more than 4,860 kilometers. The gas pipeline has been laid to the city of Guangzhou, China, where gas is distributed through existing gas branches.

Uzbekneftegaz and China National Petroleum Corporation (CNPC) signed a framework agreement to purchase and sell natural gas to the amount of up to 10 billion cubic meters a year via the Central Asia-China gas pipeline in June 2010.

CNPC and "Uzbekneftegaz" plan to sign the contract for Uzbek gas supplies in the fourth quarter of 2011. The volumes of Uzbek gas supplies are not reported.
The second branch of the Uzbek section of the gas pipeline was commissioned in December 2010. The volume of gas supplies was about 4 billion cubic meters until the end of 2010.

It is estimated that the figure will reach 13 billion cubic meters this year. It is planned to deliver 30 billion cubic meters next year.
In April, Uzbekistan and China signed an intergovernmental agreement on the principles of construction and operation of the third stage of the Uzbek section of the gas pipeline with a capacity of 25 billion cubic meters annually. It is planned to complete laying a new pipe worth $ 2.2 billion by 2014.

In August this year, China announced about the plans to increase gas imports from Central Asia by five times by 2015. According to the Chinese state-owned company CNPC, the capacity of the "Central Asia - China" gas pipeline will be brought up to 55-60 billion cubic meters of gas per year.

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