Uzbekneftegaz prepares for 49% privatisation
The state property committee of Uzbekistan wants to put up for privatisation 49% of the Uzbekneftegaz oil and gas holding company and its affiliates, Shavkat Majitov, deputy chairman of Uzbekneftegaz told a conference held in London this month by law firm Denton, Wilde, Sapte. The principle subsidiaries of the holding company are JSC Uzgeoburneftegazdobycha (extraction), JSC Uztransgaz (transportation), JSC Uznefteproduct (processing and distribution) and JSC Uzneftegazmash (equipment and maintenance).
At the moment the process is in the preliminary preparatory stages with work being done by a consortium of consultants led by BNP Paribas. Majitov said a number of recommendations had been made by the consultants regarding the pre-privatisation phase: domestic gas prices should be increased in Uzbekistan, new reserve assessments needed to be made and the holding company needed to be restructured. The Paribas consortium had also put forward four variants as to how the privatisation could be conducted though Majitov did not elaborate on what these were. He said that the Uzbek administration would most likely be taking a decision next year regarding how to carry out the privatisation.
Huge potential “commercial reserves”
Uzbekistan produces around 60 billion cubic metres/yr (Gm3) and the country’s potential reserves are considerable – 1.62 trillion cubic metres of “commercial reserves” according to Gazprom figures. The C-A-C Central Asia - Centre transmission lines take gas from Turkmenistan through Uzbekistan, Kazakhstan then into Russia, so Uzbekistan forms part of an increasingly important route for gas imports into Russia.
Gazprom buys gas from Uzbekistan as well as transit services – in 2004 Russia took 7 Gm3 Uzbek gas and from this year the Russian company plans to take up to 10 Gm3/yr.
Gazprom is involved in a joint production venture with Uzbekneftegaz at the Shakhpaty field. This is producing 0.5 Gm3/yr and has been regarded as a successful pilot PSA project. It lays the path for further PSA-based production cooperation between the two companies in the Ustyurt region.
Apart from Gazprom the Russian oil company Lukoil is also participating in a gas production joint venture with Uzbekneftegaz involving the Kandym field group (Bukhara- Khivinsky and Gissarsky fields) with reserves of 300 Gm3. The JV is 90% Lukoil and 10% Uzbekneftegaz. Production will be shared on 50/50 basis in the long term, Lukoil Overseas told EGM. It is due to begin in 2007 and will reach up to 9 Gm3 in the plateau phase. The gas will almost certainly be sold to Russian Gazprom. Lukoil is also exploring for gas in the north of the country, in the Kumgradskiy Block.
Mr Majitov privately told EGM that though a technical study had been made of what was necessary for the refurbishment of the C-A-C pipeline in Uzbekistan, its full extent could not be ascertained until Gazprom had reached agreement with Turkmenistan (there have been recent disagreements regarding gas price and volume between the two). He added that at the moment the pipeline could easily carry 50 Gm3/yr. Mr Majitov would not be drawn on the level of transit payment, but did say it was higher than last year and that Gazprom paid cash.
Nothing was said at the conference on where foreign investors in Uzbekneftegaz would make their profit – an important question given that Gazprom has a stranglehold on the export routes. However since Russian domestic prices have now reached break-even or even profitable levels, money could be made in selling gas to Gazprom. Any foreign investor in Uzbekneftegaz will have to deal closely with Gazprom given that the Russian company is effectively the operator of the Uzbek gas pipeline system.
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05 Dec 2013 21:39
05 Dec 2013 21:39