Uzbekistan attracting more foreign investment in oil and gas

Uzbekistan's oil and gas sector is attracting more interest from foreign investors.

Of special interest is the natural gas potential of the Bukhara oblast (province), where 46 natural gas fields containing combined total reserves of 14 tcf have been found.

Uzbekistan produces about 35 bcf/year of gas, mostly from Bukhara oblast, enough to meet local demand plus supplies needed by the city of Khorezm and the autonomous republic of Karakalpakstan.

The central Asian republic also produces about 160,000 b/d of crude oil and condensate.

Uzbekneftegaz pegs the country's postulated hydrocarbon resource at 32 billion bbl of crude oil, 4.6 billion bbl of condensate, and 190 tcf of natural gas. Proved reserves are 84 tcf of gas and 300 million bbl of oil, according to official estimates.

Already a sizable gas exporter and minor exporter of oil, Uzbekistan seeks to become self-sufficient also in refined products.

While it is campaigning to become a significant exporter of oil, gas, and refined products-with output of all three up in recent years-Uzbekistan remains hamstrung by FSU-holdover pipeline constraints. Hemmed in by FSU neighbors and dependent on Soviet-built pipelines, it has little opportunity to export hydrocarbons to non-FSU countries and little reason to ramp up exports to FSU neighbors notorious for not paying their energy export bills.

The government has identified almost $900 million in potential upstream oil and gas investment but is not making much headway because of internal constraints on foreign equity ownership. Still, negotiations are under way on several oil and gas field rehabilitation and exploration projects with Agip SpA, Japan National Oil Corp., and Mobil Corp., among others.

Uzbekistan also is pressing efforts to attract more foreign investment in joint ventures that would focus on an underutilized and largely dilapidated energy infrastructure.

The number of foreign joint ventures operating in Uzbekistan last year totaled 36, triple the 1995 level. A total of 52 JVs in all is registered in the republic as of the start of this year.

Refinery project

One of the biggest such JV projects involves the construction of a 50,000 b/d condensate refinery at Bukhara by France's Technip and state oil and gas company Uzbekneftegaz. It is the first grassroots refinery to be built in the former Soviet Union since that entity collapsed and will export 30% of its gasoline output and 35% of its diesel output.

The $400 million project is slated for completion by yearend.

Uzbekneftegaz also operates a 172,000-b/d refinery at Fergana, which is undergoing a major revamp by Mitsui & Co.

The European Bank for Reconstruction and Development has approved $50 million in support of the $200 million revamp, which is designed to increase plant efficiency and yield a lighter products slate.

The state oil and gas company also operates a 66,000 b/d refinery at Altyaryk.