TW:Oil and Gas Sector as Basis of Uzbekistan's Energy Independence
2011 is a remarkable year for our country – Uzbekistan is celebrating its 20th anniversary of independence. This year oil and gas industry of Uzbekistan is also celebrating a number of significant days of historical importance.
Shurtan gas chemical complex celebrates its 10th anniversary, Zavod Uzbekhimmash OJSC, a flagship of oil and gas engineering, celebrates its 70th anniversary. And even international exhibition "Oil and Gas Uzbekistan – OGU 2011" that gathered over 200 companies from 26 states of the world was held this year for the 15th time.
2010 was rather difficult for many branches of industry, including oil and gas industry. The consequences of the world economic crisis were fixed in global prices on energy materials as well as in the activities of foreign investors.
Although Uzbekistan has successfully overcome this period maintaining sustainable development and stable industrial production growth rates, not all plans have been achieved in the planned volume.
Nonetheless, last year Uzbekneftegaz and foreign companies combined their efforts in developing five new oil and gas deposits, and 27 more investment projects were included into Uzbekistan's Investment Program.
On the results of the year, the volume of attracted foreign investments and loans comprised 102.7% against the forecasted figure, including direct foreign investments worth 103.5%. Totally, 60 projects with production volume of 92 billion soums were implemented witin the framework of national and branch localization programs. The growth rates made up 141.3% as against 2009.
The participation in the 4th International Industrial Fair and Cooperation Exchange held in October 2010 was also very fruitful for country's oil and gas industry. The volume of purchased import substituting products and services rendered on the basis of agreements made during the Fair comprised 206.7 billion soums, growth rates amounted to 148.7%.
At the Industrial Fair of Geological, Fuel-power Engineering, Chemical, Oil-chemical and Metallurgical Branches held on 1-3 June, Uzbekneftegaz and its branches represented a wide range of products utilized within the framework of Localization Program, along with import-substituting products offered for utilization within the framework of industrial cooperation including cooperation with enterprises of small business and private entrepreneurship. Thus, 28 additional agreements for 2011 and 160 Memorandums of Agreements for 2012 were made as a result of the Fair.
Favorable investment environment created in our country, preferences and benefits for foreign investors give incentives to foreign entrepreneurs in cooperation.
Thus, Uzbekistan's Investment Program for 2011 covers 39 investment projects with Uzbekneftegaz, including projects aimed at attraction of direct foreign investments and credits. The company works hard on implementation of 78 investment projects worth a total of $28.6 billion. Additionally, 41 projects worth $9.2 billion are under development.
Last year marked the launch of the production of polyethylene and polypropylene pipes at Navoi Free Industrial Economic Zone, documents about the establishment of joint ventures at Navoi FIEZ were signed with a number of partners in 1Q 2011.
Thus, an agreement about the establishment of joint venture for the production of equipment for automobile CNG filling stations (CNG) and gages was signed with an American company Honeywell. Also KoUNG Cylinder JV established jointly with South Korean companies KOGAS and KOLON and focusing on the production of gas cylinders, has been successfully registered.
The construction of the plant for synthetic liquid fuels production on the basis of well-known "gas-to-liquid" (GTL) technology is another major innovative project implemented jointly with the Malaysian company Petronas and South-African company SASOL.
Uzbekneftegaz has also started cooperation with Japanese partners in the project of complex procession of a perspective alternative fuel raw materials source – oil shale, which minefields were discovered in Sangruntau in Navoi region.
The company also works on attracting investors to perspective projects in deep hydrocarbon processing industry and development of new segments of chemical production - rubber, plastic, paint products, household chemicals, cosmetics, etc.
Uzbekneftegaz NC has also been implementing a range of investment projects in modernisation of present hydrocarbon systems by launching new capacities. In 2011, it is planned to set in opertion of the desulfurization units to compensate retired capacities of Mubarek GPZ unitary branch company.
The realization of this project will ensure safe operation of set capacities for H2S natural gas sweetening and stripping in the long term perspective and compensate natural gas processing in the volume of 6 billion cubic meters a year.
Main priorities for the branch development for 2011 are further production diversification, increase of the efficiency of geologic exploration and increase of reserves, further reduction of energy outputs, etc. Special attention is paid to intensification of oil extraction from long-life, poorly explored problematic minefields.
For this purpose, domestic geology scientists are tasked to search for effective innovations, and new technologies have been attracted by foreign partners.
A geological exploration agreement in Kossor investment unit of Ustyurt region was made with Petrovietnam company. In February 2011, the President of Uzbekistan signed Resolution on measures for its implementation, according to which the investor undertakes to carry out geological explortion of Paleozoic deposits of minefields within the investment unit. It is a new technology for our region. The cooperation with CNPC, CNODC (China), Lukoil and Gazprom (Russia), Petronas (Malaysia), KNOC (South Korea) is also underway.
Moreover, 2 new oil gas condensate fields – Sherkent in Bukharo-Khiva and Sagirtau in Gissar regions were developed in 1Q 2011.
Today, the most important task set before oil and gas industry of Uzbekistan is to extract maximum valuables from existing raw materials by their deep conversion and to expand the export geography of higher-value-added products exports. One of foreground directions is gas chemistry, including the construction of Ustyurt gas chemical complex, carried out within the framework of international project financing.
The construction of propane-butane mixture units (PBMU) to increase the production of liquefied gas and desulphurization units within the framework of compensation of retired capacities at Mubarek GPZ, the construction of the fifth line of PBMU at Shurtanneftegaz, optical fiber and compressed gas vehicles production organization at Navoi FIEZ are also underway.
In March 2011 Tashkent hosted the banking forum attended by 20 international financial institutions and commercial banks interested in co-financing perspective projects. Asian Development Bank, Citi Bank, Deutsche Bank, UniCredit and other authoritative financial institutions were among the participants.
Currently, contractors are determined to build technological zones. American companies KBR and Ortlof/UOP are licensors of the technological processes. It is planned to start the production process in 2014.
International cooperation is staff training is also developing. For example, students from Uzbekistan are trained in universities of Malaysia and Russia. In March, six young people from Uzbekistan have begun their study at Petronas University of Technology by educational scholarships provided by this company.
Above mentioned directions along with new directions are covered in the project of Uzbekneftegaz's Branch Development Concept till 2020. This period will be used to achieve high efficiency indexes.
The success of the 15th international exhibition "Oil and Gas Uzbekistan – OGU 2011" held in May 2011 is another evidence of an extensive interest of serious foreign investors in oil and gas industry of Uzbekistan. The number of participants increases from year to year and the Forum has become a traditional venue for the companies interested in long-term cooperation in the area of oil and gas sector of Uzbekistan.
The importance of this event in the context of the whole Central Asian region is extremely high - it has a direct influence not only on development of the fuel and energy industry of the country but also on the expansion of international cooperation in this sector.
The anniversary exhibition and conference "OGU 2011" has gathered over 200 companies from 26 countries. The participating countries include Austria, Azerbaijan, Britain, Denmark, Germany, Iran, Italy, Kazakhstan, China, Korea, Kyrgyzstan, Cyprus, Malaysia, UAE, Poland, Romania, Russia, USA, Turkey, Turkmenistan, Uzbekistan, Ukraine, Finland, France.
In total, for 15 years, the exhibition OGU has gathered more than 1,300 companies from 47 participating countries, and 86,000 visitors. To be noted, the number of local companies displayed at the exhibition also increased. This year Uzkimyosanoat, ATIB Drilling, Eco Gaz, Mashimport, Uzkommunenergosozlsh participated in the Forum for the first time.
The flagship of the local oil and gas industry Uzbekneftegaz displayed an exclusive stand reflecting "product diversification" concept and was awarded for "the Best stand of oil and gas Company" for the second consecutive time.
As a whole, the Forum that drew leading representatives in fuel and energy industry from many states, experts and scientists, representatives of business circles, facilitated the exchange of views and experience in oil and gas sector, establishment of beneficial business contacts and further development of cooperation, development and implementation of new joint projects.
