Uzbekistans Ustyurt Plans

(Originally in Russian - Rough Translation)

At the second International conferences "Oil, Gas of Uzbekistan-98" management NK UzbekNeftegaz has declared its desire to attract foreign oil companies to participation in hydrocarbon development on the Ustyurt plateau.

In the Ustyurt region is the largest oil-and-gas bearing region of Uzbekistan: 180 thousand square kilometers, including - 110 thousand on territory of Uzbekistan. Several years ago it was considered, moreover in the highest scientific circles, that on Ustyurt had few reserves of oil and gas. However, during the past three years this theory was demonstrated wrong due to efforts of geologic explorers. The national corporation UzbekNeftegaz is today certain that the largest oil and gas fields of Uzbekistan are in this region. At this moment on the territory a plateau Ustyurt, nearly twenty oilfields, and gasfields are opened by efforts the industrial geologists. Among these were revealed large ones such as Karazhanbas North-Buzachinsky, and Kalamkas - with geological reserves over several million tons of oil.

Vice-chairman to national corporations an oil and gas production industry UzbekNeftegaz Asor Abidov, emerged at the international conference with a report on subjects of potential possibilities of Ustyurt. The report presented that currently concluded preliminary economic analysis showing utility of embedding investments in this region.

Being grounded on the new concept of conducting of an exploration, six investment blocks on the most perspective leases in the Ustyurt region were allocated. On each of them, with the company Jebco Seismic Surveys Ltd. (Great Britain) prepared package geologic-geophysical materials for presentations potential investors.

Urgench investment block covers south part (within Uzbekistan) former bottom Aral Sea and adjoining to it east part a plateau Ustyurt. General area is - 2,5 thousand sq. km. Perspective resources - 265 billion cubic meters of gas and nearly 270 million tons of liquid hydrocarbons.

Kuanyshskiy Investment block is situated in north part of the former bottom Aral Sea and adjoining to it east part a plateau Ustyurt. General area - 4,2 thousand sq. km. Perspective facility - 325 billion cubic meters gas and near 270 million tons fluid hydrocarbons.

Akchalakskiy investment block is situated in east part Ustyurt plateau. General area - 2 thousand sq. km. Perspective facility - 125 billion cubic meters gas and more than 130 million tons of liquid hydrocarbons.

Agynsky Investment block covers western part of the Ustyurt plateau. General area is more than 10 thousand-sq. km. Perspective facility - 200 billion cubic meters gas and more than 600 million tons of fluid hydrocarbons.

Shakhpakhinskiy Investment block is situated in southern Ustyurt plateau. General area is five thousand square kilometers. Perspective facility - 270 billion cubic meters gas and 300 million tons of liquid hydrocarbons.

Aral Sea Investment block covers part modern Aral Sea, including the Island of Revival," its drained part and adjoining territory. Size of block - 28 thousand-sq. km. Forecasted potential oil and gas bearing potential is priced at 500 billion cubic meters of gas and more than 150 million tons of liquid hydrocarbons.

On words Asrora Abidova, accounting profit from capital investments in proposed tendered projects varies from $4,5 up to $ 13,5 billion. Thus, the profitability of projects is at the average value of 15 - 20 percent. Payback is period - 5-6 years.

Before September 1 of this year is offered to companies interested in packages given on interest areas to by projects on the plateau Ustyurt. During September, experts NK UzbekNeftegaz evaluated and carefully study give offers, concerning investment territory. The results of tenders on each of investment blocks on a plateau Ustyurt will be promulgated on December 1, 1998. Preference will give to the offers, where maximum production of the hydrocarbons is taken into account, the most clearly prepared program of reconnaissance and, certainly, granting best economic, technical and social advantages for Uzbekistan folk.

The conditions of attracting potential investors to realization of these investment projects will be determined based on international expertise and, first, laws "About the foreign investments" and "About warranties under the foreign investments." These were accepted on the eleventh session Oliy Mejlis Republics of Uzbekistan at the end of April of this year.

Development of new technology: major problem for domestic refiners. Already nearly, three-year domestic oil production completely independently refined Uzbek oil and gas condensate. The First is swung today with Kokdumulak field and is sharply distinguished from earlier "zavoznoj" oils, have their own essential particularities: sulphurous, paraffin, and heavy crude. Under such sets, it is necessary for a short time to develop and master new technologies of conversion raw, sulphurous, crude oil. This allowed saving the whole range of previously produced oil products, including such unique specialties as transformer oils, shaft turbine oils TR 22-S and compressor oil KR-8S.

Availability of base, available in country, of oil processing, and also investment and technological cooperation to the foreign partners has allowed coping with this rather difficult problem.

Quality special oil from domestic oils

General director GPO S. Sajdakhmedov considers "UzneftePererabotka [UzOilRecast]" today not only equal in merit of oils from West - Siberian but vastly exceeds them on such important factor, as an index of viscosity. These oils are in great demand in all CIS republics. Moreover, for last three year designed technologies and mastered production 15 new names of oil products: aircraft benzine for small planes B-92, transmission oil Ferganol "SAE-140", turbine oil TP-30, engine oil Ferganol "SAE-40" for locomotive engines, new alkyl-phenol additive Ferad, substituting a scarce additive TSATIM -339, benzine-solvent NEFRAS, and others. Specifically should note that mastered for the first time in Central Asia a technology of getting plastic lubricant Fersol and Ferlita. They are distinguished by high competitiveness on the foreign market and on qualitative features exceed their own analogues Cup Grease and Lintol. This opening begins production in the country of new type of oil product - plastic lubricants.

One of the important positions, requiring urgent deciding, is increasing competitiveness of domestic distillate fuels. In particular, this means finishing the contents of sulfur in it up to a level of modern requirements. Our refiners cooperate with Japanese companies Mitsui and Co. LTD. and Toyo Engineering Corporation drawing near to them for this purpose. At present On a contract with these companies on reconstruction Fergana NPZ leads a construction of complex of installation a hydro desulfurization distillate fuels. This will allow ensuring a hydrogen installation, a perfect quality of gasoline and reducing discharge of leaded gasoline. At the enterprises for production of high-quality engine oils, is constructed by joint venture with known American firm Texaco. On assurances of the founders who have sounded on OGU-98, the first tons of oils will be worked out in the second half-year of a current year. With growth of requests to merit of baseline oils productions of high-quality oleic distillates and asphalt - raw for production of luboil are implanted technology.

The Fergana NPZ in general causes a big interest in foreign firms and companies occupied in marketing, production both marketing of luboils and additives. Therefore, on a ground of baseline oils designed production technologies of our association using a package of additives of firms Shell and British Petroleum. Trials with positive results were held and the tolerances to production and applying of engine oils M 8B, M-10G2K, M-6z-14G1, etc. are received.

Well and certainly, the large bet the domestic refiners make on Bukhara NPZ. The factory was constructed in record time (two years) for a compressor with allowance for world achievement of oil processing. More than 195 objects of the factory are entered into exploitation. The technological part of a factory is designed and is constructed by the French firm Teknip. It has allowed to run in modern process de-merkaptanization of kerosene - Meroks [Measure], hydro-cleaning of gas-oil (distillate fuels), and also to establish performing with the newest catalyzes, where high-octane gasoline is produced. All units work in a design mode of exploitation, providing output according to the established specification quality. Produced supply for the public facilities of republic of high-octane unleaded gasoline, low-sulfur distillate fuel, fuel oil and other oil products. Thus, the domestic oil refining industry by today has approached to completely supply requirements of the republic in all kinds of oil products, being guided on production of commodity adequate for international requirements.

INVESTMENT INJECTION TZK COUNTRY stays the most capacious sector of foreign investment Inseparable pair - oil and gas - always subject of investment attractiveness. Created it and around Uzbekistan, the share that happens to have nearly 75% of the spare gas condensate of the whole Central Asian region: 31% oils, 40% natural gas, and 55% coal. Attractiveness this is whips up the economic condition, which is gradually perfected. The government repeatedly emphasized, that in investment policies of country one of priority directions is the creation ecologically clean production of mining activity and profound waste-handling of mineral-raw resources, including production activity both oil processing and gas. Appraisal the international experts, Uzbekistan has the large oil reserves and gas, that will allow to develop an export potential both raw resources, and adjacent refining branches. The growth rate of production in the given quadrant for the last 7 years are called amazing by the international experts at a conference "OGU-98". So, the bulk of production of oil has grown in comparison with 1990 in 2,8 times, and gas in 1,2 times, that practically has allowed achieving to the present time of self-sufficiency of republic energy production. Dynamics of the foreign investments in oil and gas industry demonstrates their accretion since 1994 more than in 50 times. The forecasts also hopeful: Their further growth for 2 years in two times is envisioned.

To the beginning of 1998 the investment policies in Uzbekistan has become more concrete and goal-directed in nature. And presently major in a problem of the investments - their performance, creation of conditions for intensive of investments in the most effective, competitive productions producing rapid feedback, allowing maximum to augment the incomes of the enterprises, population and budget.

The State program, accepted by government, of increasing export potential of the Republic of Uzbekistan on a period till 2000 speaks unprecedented on the importance and plotting scales recently about purposefulness of investment activity in Uzbekistan. This document - original master plan, - is a guide to operating not only for the domestic businessmen, but also first of all for the foreign investors. In which are determined the branch programs of progressing of an export potential of republic until 2000 and requirement for the foreign investments on all priority branches of a national economy. In the program are taken into account as the scheduled positive alterations in economy and investment situation for Uzbekistan, and available problems in this field, including material measure on overcoming added up raw directivity export of republic. According to this, the program requirement for foreign investments and credits until 2000 is determined to be more than $ 5 billion.

The policy of power supply of Uzbekistan envisions a rational combination of production activity and increasing all basic energy production. The primary attitude in the next twenty-year period is on the gas industry capable of providing the republic the most cost effective and ecologically clean energy production.

Because of progress on export potential oil and gas production complex on a period until 2002 there is a substantial requirement for the investments at a rate of more $ 1 billion. The sources of financing also are called significant. Presumably, it will again be the credits from export-credit agencies of USA, France, Japan, Germany, and EBRD.

The realization of the program will allow enlargement volume of export in oil and gas production branch with $ 453,1 million. In 1997 - up to $ 693,2 million. In 2000 the accretion of export in oil and gas production complex is achieved basically at the expense of realization of the investment programs on reconstruction and building of new enterprises. This will allow to increase merit of produced commodity up to a level of the international standards and to augment bulk production.

Material pages prepared by Timofej Zhukov and Dmitri Pavarov.