Oil and gas of Uzbekistan

Tashkent, Uzbekistan, Dec.29
By Demir Azizov- Trend:

According to Uzbekneftegaz National Holding Company (NHC), the monopoly operator of Uzbekistan's oil and gas industry, the proven hydrocarbon resources of the country amounted to about eight billion tons of conventional fuel and perspective resources - about two billion tons for December 2013. The unproven oil, gas and condensate reserves of Uzbekistan are estimated at over 0.5 billion tons of conventional fuel.

The amount of extracted hydrocarbon reserves of industrial category was over 2.5 billion tons of conventional fuel in December 2013. Some 65 percent of this volume fell to gas reserves.

Some 243 oil and gas fields have been discovered in Uzbekistan as of early 2013. Around 104 of them are under development, some 79 have been prepared for development and conserved and geological exploration work is being held in 60.

The territory of Uzbekistan is divided into five oil and gas regions:Ustyurt, Bukhara-Khiva, Surkhandarya, Hissar and Fergana- and comprises 208,900 square kilometers. To date, Uzbekistan has developed nearly 20 percent of the total volume of hydrocarbonic raw material resources, including 75 percent in Bukhara-Khiva region, 35 percent in South-West Hissar, 12 percent in Surkhandarya, 22 percent in Fergana and 10 percent in Ustyurt region.

Prospective gas resources are estimated at nearly two trillion cubic meters and liquid hydrocarbons (oil and gas condensate) with 900 million tons of it in the Ustyurt region. The increase in "blue fuel" reserves in Ustyurt is expected to be over 1 trillion tons, which will account for about 60 percent of the total forecasted increase of gas reserves in the republic.

In accordance with the concept for development of industry, it is planned to increase gas reserves 25 percent, oil reserves -1.63 times and gas condensate reserves -1.33 times by 2020. The annual volume of search, exploration and parametric drilling will increase 2.5 times and will hit 300,000 linear meters per year.

Plans are to increase the area of 3D seismic survey from 1,640 square kilometers in 2010 to 4,000 square kilometers in 2020, at the same time reducing the 2D profile shooting from 16,850 linear kilometers to 15,100 linear kilometers.

Currently, the capacity of Uzbekneftegaz NHC allows it to produce around 70 billion cubic meters of natural gas and eight million tons of liquid hydrocarbons per year.

Oil of Uzbekistan
Uzbekistan's oil reserves are estimated at 600 million barrels (82 million tons). Around 191 oil and gas fields have been discovered in the country's territory.

Due to limited production volume, oil is used for providing national oil and gas processing plants in Uzbekistan and there is no export potential.

Under the current volume of hydrocarbon production, Uzbekistan has oil reserves for 21 years and condensates - for 25 years. At the same time, about 60 percent of the oil belongs to easily extractable reserves.

Uzbekneftegaz currently has 121 oil fields- 73 oil fields are being developed, 12 were prepared for industrial development, 28 - explored, eight - conserved. According to the holding, the average level of oil recovery in these deposits is 23 percent. About 40 percent of resources require additional drilling of a large amount of deep wells, including those with horizontal and branched shafts, and using the advanced technologies.

Some 48 investment blocks, including two blocks in the Middle Syrdarya potential oil and gas region were allotted to intensify the exploration operations and to increase the growth of hydrocarbon reserves in Uzbekistan. The licenses on 18 blocks were issued to foreign investors. Uzbekneftegaz conducts the joint exploration operations on two blocks with foreign investors. The negotiations on eight blocks are being held with foreign investors for exploration operations. Uzbekneftegaz conducts the exploration operations on eight blocks.

Six investment blocks with promising hydrocarbon reserves were offered to foreign investors for exploration in 2013.

Three blocks in the Bukhara-Khiva region, two blocks - in the Middle Syrdarya region, and one block - in the Fergana region with total undiscovered hydrocarbon reserves in the volume of 500 billion cubic meters of natural gas and 70 million tons of liquid hydrocarbons are among them.

Uzbekneftegaz has started the heavy oil and bitumen exploration in the Korsagly-Dasmanagin zone of the Surkhandarya region (south of Uzbekistan) this year.
Similar work is to be launched in the Besharcha area of the Surkhandarya region (east of the country), radial drilling on 25 oil and gas fields in the Kashkadarya region in southern Uzbekistan (at Western Tashly and East Tashly, North Shurtan, Garmistan, Yangi Karatepa and Kumchuk fields).

According to the calculations of the holding, plans are to extract an additional 100,000 tons of oil per year from these geological and technical operations.

China's CNPC, Czech Eriell Corporation, Tethys Petroleum company (registered in Guernsey, Channel Islands) are the main partners using these technologies.

Drilling was launched to obtain shale oil in the Sangruntau field of northern Navoi in March 2013.

The probable reserves of oil shale in Uzbekistan amount to about 47 billion tons. The diesel fraction obtained from shale in the Sangruntau field with reserves of 357 million tons (C1 + C2) reaches about 30 percent. This is the highest index among the major deposits of this type in the country.

The oil shale production will further strengthen the position of Uzbekistan, which already has rich oil and gas deposits.

Uzbekneftegaz plans to invest $235 million to increase oil production on fields in the country until 2020.

Uzbek gas projects

Kandym-Khauzak-Shady project

The Product Sharing Agreement on the Aral block Kandym-Khauzak-Shady was signed in 2006. The estimated cost of the project is $3.145 billion.

The Aral block 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 Jan. 31, 2007.

The PSA was signed within the framework of an international consortium consisting of Uzbekneftegaz, Malaysian Petronas, Russian Lukoil Overseas Holding Co., Ltd., Korea National Oil Corporation (KNOC) and China's CNPC. Each consortium member has an equal share in the agreement.

In May 2011, Petronas withdrew from the consortium and its share was distributed equally among the other members of the PSA. In autumn, 2013 Korean KNOC abandoned the consortium. Currently, the project is divided equally between LUKOIL, Uzbekneftegaz and CNPC.

A 2D-seismic exploration of the water, land and transit zones was carried out on about 2,300 linear kilometers of contract area, six prospective structures were identified. One of them - the West Aral - was discovered and confirmed by means of an appraising drilling. It has the deposits of 11 billion cubic meters of gas. Investment in the project totaled over $110 million.

Currently, 3D-seismic exploration is being conducted within the project. One exploratory well and two dependent wells will be drilled at the current stage of the geological exploration works, based on the results of the exploration drilling. The geological exploration works are designed to be conducted till mid-2016.

According to the data from Uzbekneftegaz, there may be over 30 anomalies related to the oil and gas objects within the waters of the Aral Sea's Uzbek part having an area of 12,500 square meters.

It is planned to produce 11 billion cubic meters of gas per year as part of the Kandym-Hauzak-Shady-Kungrad project.

Production Sharing Agreement on the South-West Hissar project

The Production Sharing Agreement was signed in January 2007 for a term of 36 years and entered into force in April 2007. LUKOIL was included into the project in March 2008. On Jan. 1, 2011 the block's proven reserves constituted 1,417 trillion cubic feet of gas and 23 million barrels of oil and condensate.

In March 2008, LUKOIL Overseas (wholly owned by the Russian oil company LUKOIL) concluded acquisition of the SNG Holding Ltd., including the Soyuzneftegaz East Limited, which participates in the PSA on development of fields in Southwestern Hissar and Ustyurt region of Uzbekistan.

The deal totaled $580 million.

Uzbekneftegaz acts as the second party of the PSA, in the capacity of a state authorized body. In 2010, 2D and 3D- seismic surveys were completed at the block. The survey provided a growth rate of reserves and identified several prospective structures and discovered two new fields, namely South-East Kyzylbairak and Shamoltegmas.

Uzbekistan's share in the profit production will range from 55 to 80 percent depending on the profitability of the project. The Southwestern Hissar contract area (Kashkadarya oblast) includes seven fields - Jarkuduk-Yangi, Gumbulak, Amanat, Pachkamar and Adamtash gas and condensate fields and South Kyzylbairak oil and gas field and Koshkuduk oil field. Small amounts of oil and gas condensate are currently produced at the southern Kyzylbairak and Koshkuduk fields.

In late 2011, LUKOIL Overseas (operator of international production projects of LUKOIL) produced the first gas at the largest field of the block - the Jarkuduk-Yangi Kyzylcha field, as part of the PSA on development of gas reserves of the Southwestern Hissar (Kashkadarya oblast). The planned gas production stands at 16 million cubic meters per day (5.8 billion cubic meters per year).

Currently total cumulative production of gas within two PSAs, according to the Russian company, is 20 billion cubic meters.

The company received a license for 35 years taking into account a five-year exploration period within the 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.

Future projects

In October, 2013 National Holding Company (NHC) Uzbekneftegaz and the China National Oil and Gas Exploration and Development Corporation (CNODC), a subsidiary of CNPC, established a joint venture (JV) for further exploration and development of gas condensate fields in Uzbekistan.

The initial capacity of the joint venture may amount to 1.5 billion cubic meters of gas per year. A feasibility study of the project of development of new fields is planned to be prepared in the third quarter of 2014.

In June 2006, CNODC signed an agreement with the NHC Uzbekneftegaz to conduct geological explorations on five investment blocks within the Ustyurt, Bukhara-Khiva and Fergana oil and gas regions of Uzbekistan during five years and is worth $260.2 million.

In March 2009, the first phase of geological explorations were completed at Aralomorye and Samsko-Kosbulak investment blocks of Ustyurt oil and gas region, Karakul and Romitan investment blocks in the Bukhara-Khiva oil and gas region, Karajida-Gumhan investment blocks in Ferghana oil and gas region.

As a result of geological explorations at the Karakul block, three fields namely Khojasayat, Khojadavlat and East Alat were discovered and two promising structures were prepared for drilling.

In early 2012, CNODC and NHC Uzbekneftegaz signed a supplementary agreement to extend the geological explorations for three years in line with which CNODC received an opportunity to extend the exploration within the contract area with a condition of returning 25 per cent of the contract area in future to the Uzbek side. Total investments will amount to $14.9 million.

Translated by L.Z., N.H., E.A., M.L.

Edited by C.N.

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