UZBEKISTAN - The Petroleum Fields & Operators - European & Asian Roles.

The role of non-US companies in the Uzbek petroleum sector is limited mainly to the downstream. In the upstream, one of the main JVs involved Elf Aquitaine of France (now part of TotalFinaElf). It explored for oil in an area near the Cornelius-operated Mingbulak. There have been suggestions

Technip of France, along with Marubeni and JGC Corporation of Japan, built the 50,000 b/d condensate refinery at Bukhara, which was inaugurated in August 1997. This brought the number of refineries in Uzbekistan to three and strengthened the country's position as a regional exporter of oil products (see Downstream Trends).

Marubeni of Japan signed a protocol with the Uzbek government in May 1993 to co-operate in the petroleum sector. As part of the accord, Marubeni and Chiyoda Corp. of Japan won a letter of intent in June 1993 to submit to Uzneftepererabotka feasibility studies on the construction of two new refineries in Uzbekistan, each to cost about $500m. But these projects are yet to be moved off the ground.

Nissho Iwai of Japan is involved in the development of Kokdumalak in partnership with MW Kellogg and Uzbekneftegaz (see above). A broad co-operation protocol between Nissho Iwai and the Uzbek government had been signed in Tokyo in May 1994, when President Karimov was visiting Japan. Mitsui of Japan has upgraded the 108,000 b/d Ferghana oil refinery, in a $210m project financed through $100m in credits from JBIC, $90m from the European Bank for Reconstruction and Development, and $20m provided in kind by Uzbekneftegaz.

In May 2000 Romania's RPT Oil Holdings and Uzgeoneftegazdobycha formed a 51/49 JV to develop the Zafar gas/condentate field in the gas-rich Kashkadarya region. The venture, called Uzromneftegaz, was initially to invest $10m. Now Uzromneftegaz is producing 13.5 MCF/day of gas and 6,000 b/d of condensates, with its streams having started up in early 2001. TH Loy Industries Bhd of Malaysia has developed the Karaktay oilfield under a 50-50 JV agreement with Uzbekneftegaz signed in July 1994. TH Loy is a subsidiary of Probadi Sdn. Bhd., one of the key companies then said to have links to the Prime Minister of Malaysia, Dr. Mahathir Mohammed.

The Russian role in Uzbekistan's energy projects is limited, compared to the presence of Russian oil and gas companies in Azerbaijan and Kazakhstan. Under a framework agreement signed in late July 2001, which is to be replaced shortly by a final accord, LUKoil and Itera will jointly explore for and develop major gas fields in southern Uzbekistan.

The framework agreement followed in visit to Uzbekistan by Russian President Vladimir Putin and talks with his Uzbek counterpart Islam Karimov. The two leaders agreed to a long-term partnership between the two countries.

LUKoil, Itera and their national partner Uzbekneftegaz will invest about $750 million over the course of their 25-year PSA. The PSA will include a clause for its extension for another 10 years. This is expected to be signed before end-2002.

Exploration work is to begin in early 2003 on blocks in the Bukhara-Khiva, Gissar and Kashkadar regions. In Kashkadar the partnership will concentrate on the partly-developed structure of the Kandym group of gas fields. Most of the Kandym fields, being operated by Uzbekneftegaz, are producing gas.

The allocated blocks for exploration and the Kandym fields are estimated to contain about 250 BCM of natural gas and 10 million tons of condensates.

LUKoil and Itera will each hold 45% in the planned joint venture, with Uzbekneftegaz to hold the remaining 10%. The Russian firms will equally provide the funding.

The financing obligation of Uzbekneftegaz will be in the form of its field licences and existing infrastructure. Any additional funding contribution from Uzbekneftegaz will be provided by LUKoil and Itera, which will recover their money out of the production share of the Uzbek company.

The venture is planning to produce up to 10 BCM/year of gas within five to six years of exploration and development work, with output in the initial phase to average 8 BCM/year. The gas will be exported to Russia and other CIS markets.

While LUKoil will focus on production, Itera (a private Russian trading company registered in Florida) will be handling the transporation amd marketing of the gas in collaboration with Uzbekneftegaz. LUKoil is the biggest among Russia's integrated oil companies and aims to become a major producer of natural gas in Russia and other CIS countries.