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NEWS

Uzbekistan focuses on Kandym field development

www.azernews.az
26 May 2015

Uzbekistan has the potential to become a strong regional economy with a solid infrastructure and a large consumer market.

The Uzbek government will allocate about $200 million in external infrastructure to Kandym gas processing plant, the construction of which will be carried out by the Oil Company LUKOIL .

For this purpose, the Uzbek Government issued a resolution “On organization of construction of objects of external infrastructure of Kandym gas processing plant” on May 19, 2015 according to RIA News.

The resolution contains basic provisions on the construction and implementation as well as modernization and expansion of the project.

According to the resolution, the State Joint Stock Company Uzbekenergo and the State Joint Railway Company Uzbekistan Temir Yollari will construct the external electricity and railway infrastructure of Kandym gas processing plant in 2015-2017. A 220 kilovolt electricity supply line will supply existing substations to Kandym gas processing plant. Their modernization and expansion is included in the project - July 1st, 2017.

Moreover, Uzbekistan Temir Yollari will overview the construction of railway transport infrastructure and branch lines to Kandym gas processing plant, including internal railroads - October 2015.

The Uzbek government also issued instructions for the successful construction of an access railway track, including internal tracks to Kandym gas processing plant. With this in mind the Ministry of Economy, Uzmetkombinat, Uzstroymaterialy and Uzbekneftegaz should provide metal, cement and fuel products to Uzbekistan Temir Yollari and Uzbekenergo in accord with their request on direct agreements and regulated prices within the project.

Under the resolution the government also entrusted Uzbekneftegaz and Uzbekenergo to construct intersections of existing gas pipelines and high voltage electricity lines of electricity.

The Uzbekistan State Customs Committee was committed to carry out customs registration of goods in the framework of the Production Sharing Agreement in relation to the Kandym fields, as well as Khauzak and Shady and Kungrad sites until April 1st, 2019.

The Production Sharing Agreement for the Kandym-Khauzak-Shady-Kungrad project was signed in June 2004 and a month later an operating company was incorporated under the name of LUKOIL Uzbekistan Operating Company (a subsidiary of LUKOIL Overseas). The PSA for a term of 35 years entered into force in November 2004, and field operations began at the same time. The project participants are LUKOIL Overseas (90 percent) and the National Holding Company Uzbekneftegaz (10 percent) according to LUKOIL official site.

On February 16, 2015 LUKOIL and Hyundai Engineering signed a contract for procurement, construction of the Kandym gas processing plant and field infrastructure development worth US$2.66 billion.

The total amount for the project is US$2.01 billion, which includes engineering, procurement, and construction. It is scheduled to be completed by the second half of 2018. This contract made a much stronger position for Hyundai Engineering in the plant market of Central Asia.

The main purpose of this Project is the KGF development and the pool of gas processing plant. The capacity of the field and the gas processing plant is estimated to stand at up to 8 billion cubic meter per year of natural gas - more than 200 thousand tons per year of gas condensate and about 190 thousand tons per year of sulfur from the Kandym gas field, which is about 520km southwest from Tashkent, the capital of Uzbekistan.

The construction of the Kandym gas processing plant is LUKOIL's largest investment project in Uzbekistan. The project will create over 2,000 jobs. During the peak construction period, it will employ more than 10,000 workers at various facilities.

The Kandym project includes six gas condensate fields: Kandy, Kuvachi-Alat, Batteries, Parsankul, Hodge and Western Hoxha.