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NEWS

Lukoil, CNPC to develop Uzbekistan's gas condensate fields

4 April 2013

www.azernews.az

Uzbekneftegaz National Holding Company, Russian energy giant Lukoil and China National Petroleum Corporation (CNPC) have agreed on joint development of the gas condensate fields in Uzbekistan.

A source at Uzbekneftegaz told Azerbaijan's Trend news agency that the Uzbek government had instructed relevant ministries and entities to prepare a draft agreement between Uzbekneftegaz, Lukoil and CNPC and equip Khojasayat section of the Dengizkul deposit, Khojadavlat and East Alat fields of the Karakul investment block, located in Bukhara-Khiva region.

The agreement may be signed in the second quarter of 2013.

The source said that the government also issued an instruction to work out a preliminary feasibility study within a two-month period to equip, prepare and transport gas from the Khojasayat section of Dengizkul deposit, Khojadavlat and East Alat fields.

Currently, Lukoil is implementing three projects in Uzbekistan under the production sharing agreement (PSA) on Kandym-Khauzak-Shady-Kungrad, involved in the development of deposits of South-West Gissar as well as explores the Uzbek part of the Aral Sea within an international consortium.

To date, the cumulative gas production of Lukoil in Uzbekistan has hit more than 15 billion cubic meters, with the volume of investments exceeding billion. Lukoil plans to produce at least 18 billion cubic meters of gas in Uzbekistan by 2016 and to increase the volume of investment up to billion by 2017 within the first two projects under the PSA terms.

Lukoil predicts that the total volume of investments will exceed .5 billion, which will turn the company into the largest investor in Uzbekistan's economy.

In June 2006, China National Oil and Gas Exploration and Development Corporation (CNODC), CNPC's subsidiary, signed an agreement with Uzbekneftegaz for exploration operations on five investment blocks within Ustyurt, Bukhara-Khiva and Fergana oil and gas regions of Uzbekistan for five years.

The exploration program worth 0.2 million was fully implemented in 2011. As a result, a number of fields were discovered at the Karakul block and two perspective structures were prepared for drilling.

In June 2012, CNODC and Uzbekneftegaz signed an agreement on the principles of establishing a joint venture for the development of gas condensate fields on the Karakul block. The joint venture is expected to extract up to 1.5 billion cubic meters of gas per year. The initial cost of the project is 0 million.

Uzbekneftegaz, which was established in 1998 and provides over 90 percent of the hydrocarbon production in the country, is a monopoly operator of the Uzbek oil and gas sector. Its capacity allows extracting natural gas in the amount of about 70 billion cubic meters and 8 million tons of liquid hydrocarbons annually.