How Uzbekneftegaz to pay off its $600M debt to Lukoil?

Oil&Gas Materials 28 June 2019 16:24 (UTC +04:00)

Baku, Azerbaijan, June 28

By Fakhri Vakilov - Trend:

The head of Uzbekneftegaz, Bakhodir Sidikov spoke on the debt to the Russian company Lukoil, Trend reports via Uzbek media.

Sidikov said that Lukoil is the largest investor in Uzbekistan, and the total investment exceeds $7 billion, which in turn was used to build gas and chemical complexes for gas production.

“I want to emphasize that the debt didn't accumulate at once, but gradually grew over several years,” the head of Uzbekneftegaz said.

Uzbekistan owes Lukoil about $600 million in gas supplies in 2018. The debt occurred due to the fact that the country took part of the gas to the domestic market, although the terms of the production sharing agreement (PSA) provide for the export of the entire volume of gas produced in Uzbekistan.

Recently, President of Uzbekistan Shavkat Mirziyoyev, also said that national interests were not taken into account in drawing up the PSA with Lukoil.

As Mirziyoyev noted, Uzbekistan buys a 1,000 cubic meters of gas from Lukoil for $146 and sells to the population for $40. Due to the difference, a debt of $600 million was formed, the president noted.

Sidikov stated that the debt was formed due to the growing demand for gas among domestic consumers. Gas consumption is increasing in both population and enterprises.

"Now specific measures are being carried out to pay off this debt. In particular, there is an agreement with Lukoil on the restructuring of part of the debt," he said.

"In addition, today we should pay more attention to the sale of gas for export. This task was set by the president. All the work of Uzbekneftegaz is aimed at increasing its own production, in the future to prevent the sale of this gas only to domestic consumers," Sidikov noted.

Earlier, Trend reported that gas production at the Lukoil projects in Uzbekistan will exceed 16 billion cubic meters per year.


Follow author on Twitter:@vakilovfaxri