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NEWS

South Korean, Uzbek leaders sign $4.1B worth of deals

23 August 2011

The Associated Press of 8/23/2011 - The presidents of Uzbekistan and South Korea have signed energy deals worth a total of around $4.1 billion, marking a notable investment coup for the diplomatically isolated ex-Soviet nation.

South Korean President Lee Myung-bak wrapped up a two-day state visit Wednesday to Uzbekistan that was crowned by an agreement to develop a major gas field and build a chemicals plant in the country.

"This is where we declare the beginning of a petrochemical complex that can change the history of Uzbekistan," Lee was cited as saying by South Korea's Yonhap news agency.

Uzbekistan's foreign ministry said in a statement on its website Wednesday that the chemical plant will require $2.6 billion worth of investments to complete. The plant will process reserves drawn from the yet-undeveloped Surgil field, which is estimated to hold around 130 billion cubic meters of natural gas.

Surgil is located near the Aral Sea, which has almost entirely dried up as a result of grand Soviet-era river-diversion projects designed to nourish the region's lucrative cotton industry.

Yonhap said companies involved in the gas project will include South Korea's GS Engineering & Construction Corp., Samsung Engineering Co., Hyundai Engineering Co. and Uzbek state energy company UzbekNefteGaz.

In total, more than 20 agreements in sectors including energy, engineering and construction were signed during Lee's visit.

The former Soviet country has had trouble attracting Western investment amid widespread international concerns over its opaque business climate. Uzbekistan was ranked 172nd out of 178 nations in Transparency International's most recent index for perceived levels of public-sector corruption.

It has had more luck in Asia, however. China earlier this year signed $5 billion in investment deals to boost gas supplies from the resource-rich country.

Uzbekistan has long been a major investment destination for South Korean companies. Trade turnover between the two countries reached approximately $1.5 billion in 2010. Almost all of that consisted of exports to Uzbekistan.

Some 200,000 ethnic Koreans deported by Soviet dictator Josef Stalin live in Uzbekistan. It is the largest Korean community across the former Soviet Union.