ADB ready to allocate $150 million to "LUKOIL" for gas production increase in Uzbekistan

ADB ready to allocate $150 million to "LUKOIL" for gas production increase in Uzbekistan

Tashkent, Uzbekistan, Aug.17

By Demir Azizov- Trend:

The Asian Development Bank (ADB) is considering to provide additional funds to the Russian "LUKOIL" oil company for Kandym project implementation in Uzbekistan.

The total amount of additional funding in the form of credit and guarantees on commercial risks could reach $150 million, says the report published Aug. 15 on the ADB website.

LUKOIL Overseas Uzbekistan Ltd. (fully owned subsidiary of "LUKOIL") in March 2012, in Tashkent signed an agreement with a consortium of banks for a loan of up to $500 million for Kandym Hauzak-Shady-Kungrad project in Uzbekistan, implemented under the terms of PSA (Production Sharing Agreement).

The consortium includes ADB, Islamic Development Bank (IDB), Credit Agricole CIB, BNP Paribas (Suisse) SA and the Korea Development Bank (KDB).

Within the frameworks of consortium ADB has provided the Russian company with a loan of $100 million and guarantees on risks for the commercial part of the financing in the amount of $200 million.

The loan was provided to finance the investment program of development of Kandim group of fields and production increase on the territory of Hauzak-Shady.

In accordance with the decision of the leadership of Uzbekistan, the participants of the project "Kandym-Hauzak-Shady-Kungrad" "LUKOIL" (90 percent) and the National Holding Company "Uzbekneftegaz" (10 percent) must equip and put into the development Kuvachi and Alat Kandym group field as well as the northern part of Dengizkul field of Shady sector until 30 December 2014.

Construction project of a gas processing plant and arrangement of Kandym group of fields should be developed and submitted for consideration by the Cabinet of Ministers of Uzbekistan Feasibility Study during the same period. The first phase of the GEA Kandym with a power of eight billion cubic meters of gas per year should be introduced until October 1, 2016.

Kandym group consists of six gas condensate fields. Recoverable reserves of the project are 330 billion cubic meters of gas, the planned level of production is 11 billion cubic meters of gas per year. PSA agreement for the project was signed in 2004. Three years later, a group of deposits of Hauzak-Shady was put into operation. As of the beginning of 2014, cumulative production at the Khauzak-Shady was 20 billion cubic meters of gas.

The gas is totally exported from Uzbekistan's main networks via OJSC "Gazprom".

At present, the "LUKOIL" works in Uzbekistan on the implementation of the three projects - "Kandym-Hauzak-Shady-Kungrad", the mining of the Southwestern Hissar, and the conduction of exploration of the Uzbek part of the Aral Sea in the international consortium.

Within the frameworks of the first two projects on conditions of PSA "LUKOIL" plans to produce 18 billion cubic meters of gas annually by 2017 and to increase the amount of investments up to $5 billion versus 3.2 billion currently invested.

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