Uzbekistan owes Lukoil $600M for gas

Oil&Gas Materials 6 March 2019 16:21 (UTC +04:00)

Baku, Azerbaijan, March 6

By Fakhri Vakilov - Trend:

Uzbekistan owes Lukoil about $600 million in gas supplies in 2018, while under an agreement on debt restructuring, Russian company pledged to supply gas to Tashkent (Uzbekistan) at a discount, Trend reports with reference to Reuters.

Senior vice-president of Lukoil for mining Azat Shamsuarov stated this during a phone call with investors.

The company operates in Uzbekistan, which Lukoil also calls the growth point in hydrocarbon production, under the terms of a production-sharing agreement (PSA) in the Kandym-Khauzak-Shady-Kungrad and South-West Gissar projects. The gas produced on projects is mainly shipped to China.

Shamsuarov told investors that the debt of $600 million was due to the fact that Uzbekistan took part of the gas to the domestic market, although the terms of the PSA envisage the export of all gas produced in Uzbekistan.

The vice-president of Lukoil added that, currently, Lukoil produces about 14.5 billion cubic meters a year in Uzbekistan. The company has invested about $8 billion in projects in the country and has already returned the half of the amount.

As a result, Uzbek side agreed to return the debt in 2 years in equal monthly installments, as well as Lukoil will supply 5 billion cubic meters a year to the domestic market of the country at a discount of 12.5 percent compared to the weighted average netback for the prepayment, Shamsuarov said.

Earlier, by 2020, Lukoil planned to increase gas production in Uzbekistan to 16 billion, of which 8 billion cubic meters were planned to be extracted on Kandyma, 5 billion cubic meters on Gissar and 3 billion cubic meters on Khauzak fields.

In April last year, the Kandym gas processing complex (KGPK) was commissioned ahead of schedule in the Bukhara region. The national holding Uzbekneftegaz and LUKOIL participated in the construction of KGPK which became their largest investment project in Uzbekistan. Its total cost was $3.4 billion. The enterprise will annually process more than 8 billion cubic meters of gas, which will allow producing purified gas, gas condensate, sulfur and other products, providing work for more than 2,000 people.

Uzbek State Statistics Committee stressed that, in 2018, a total of 59.8 billion cubic meters of natural gas was produced in the country, which is 6.1 percent higher than the previous year.

Lukoil, who started operating in Uzbekistan in 2004, had previously been eyeing new assets in this country.


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