Lukoil Improves its Uzbek Terms

Russian privately held energy company Lukoil signed an amendment to its production-sharing agreement (PSA) to develop the Kandym group of fields and Khauzak, Shady and Kungrad areas in Uzbekistan.

The document  that will improve project implementation conditions for the investors was signed by Uzbek deputy prime minister Gulomzhon Ibragimov, Lukoils vice president Sergey Nikiforov and Uzbekneftegaz CEO Alisher Sultanov.

The amendment entails a number of adjustments to the economic indicators of Kandym-Khauzak-Shady-Kungrad PSA, Lukoil said in a statement without giving details.

Kandym group of fields (Image credit: Lukoil)

Lukoil sources say a huge investment is planned for further development of the contract area, including a new gas plant. “In today's energy price environment, Lukoil needs more favourable terms for implementing such costly projects,” they said.

In April this year Lukoil and its partners Uzbekneftegaz kicked off construction of Kandym gas processing complex of 8.1bn m³/yr design capacity.

Lukoil plans to invest $12bn in Uzbekistan, Russia’s president, Vladimir Putin, said last month after negotiations in Moscow with his Uzbek counterpart Islam Karimov. He added that the company has already invested $3.6bn in gas and condensate development in Uzbekistan.

The PSA for Kandym-Khauzak-Shady-Kungrad  was signed on June 16, 2004 and production started in 2007 in Khauzak-Shady gas field in Bukhara region.

Lukoil and Uzbekneftegaz are implementing two PSAs: Kandym-Khauzak-Shady-Kungrad and Southern-Western Gissar. By 2018 Lukoil plans to produce over 16bn m³/yr in Uzbekistan, according its president, Vagit Alekperov. Most of the gas is exported to China by our Uzbek partners, he said.

Lukoil is operator with a 90% and national holding company Uzbekneftegaz holds the other 10%. The Kandym group consists of six gas condensate fields – Kandym, Kuvachi-Alat, Akkum, Parsankul, Khoji and West Khoji.

Kama Mustafayeva