Uzbekistan approves second PSA with Gazprom

Oil&Gas Materials 4 July 2019 14:37 (UTC +04:00)

Baku, Azerbaijan, July 4

By Fakhri Vakilov- Trend:

Presidential of Uzbekistan Shavkat Mirziyoyev approved the basic conditions for implementing a production sharing agreement (PSA) between Uzbekistan and Russian Gazprom EP International B.V. (a subsidiary of Gazprom) for developing the Djel gas field, Trend reports via Uzbek media.

The presidential resolution notes that the PSA provides for a marginal level of products’ compensation in the amount of 75 percent, a profit tax rate of 12 percent and an annual financing rate for the unrecovered part of the investor’s costs to be reimbursed at 8 percent.

Royalties in the event of a change in natural gas market conditions during the PSA implementation period will be applied in the range of 0 percent at a price of less than $125 per 1,000 cubic meters to 30 percent at a price of more than $170.

PSA also provides for the revision of its individual, technical and economic parameters with consolidation of the parity section of profitable products when developing the feasibility study and maintaining the investor’s internal rate of return (IRR).

Gazprom EP International and Uzbekistan signed the PSA on the Dzhel field development project in October 2018. The term of the agreement is 25 years. The company plans to start gas production at the Dzhel field in 2021. The annual gas production at the field is expected to be 150 million cubic meters during the years 2021-2024, with an increase to 300 million cubic meters from 2025.

The estimated cost of the project is $200 million. The Djel field was discovered in 2009 on the Shakhpakhty block. Its reserves are estimated at 6.4 billion cubic meters of gas and 76,000 tons of condensate.

In 2002, Gazprom and Uzbekneftegaz signed a strategic cooperation agreement, which provides for Gazprom’s participation in natural gas production projects in Uzbekistan under PSA terms. Since 2004, Gazprom, under the terms of the PSA, has been involved in the restoration of gas production at the Shakhpakhty field.


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