Uzbekistan – part two:

Published December 12th, 2000 - 02:00 GMT

Uzbekistan contains significant oil and gas reserves, and currently ranks as the world's eighth largest natural gas producer.  

 

Even though Uzbekistan is remote to the Middle East Region, it should be taken in account that portions of it’s Gas resources will find their way to the region to Turkey , via Russian or Iranian pipes, thus Uzbekistan may become an important player in the region’s oil & gas sector.  

Note: information contained in this report is the best available as of March 2000 and can change.  

 

Natural Gas:  

Uzbekistan is the only former Soviet republic to have substantially increased its natural gas production since becoming independent, with gas production increasing from 1.5 trillion cubic feet (Tcf) in 1992 to an estimated 2 Tcf in 1999, making Uzbekistan the eighth largest producer in the world.  

 

The richest gas district is the Ustyurt region, of which 60 percent is located in Uzbekistan and the rest in Kazakhstan.  

 

Most gas production is concentrated in 12 deposits, particularly in southeast Uzbekistan in older fields such as Shurtan and Kokdumalak.  

 

In order to offset declining production at some older fields such as Uchkir and Yangikazen, Uzbekistan will speed up development at existing fields such as the Kandym and Garbi fields.  

 

Longer-term measures involve finding new reserves with foreign help, but Uzbekistan has had difficulty attracting a major foreign company to make a major investment in its upstream sector.  

 

Enron and Unocal have substantially cut back on operations in Uzbekistan, effectively ending their operations in 1998. 

In general, most of Uzbekistan's natural gas requires processing because it has a high sulfur content.  

 

Much of the gas is processed at the Mubarek processing plant, which has a capacity of over 1 Tcf/year. Most of Uzbekistan's gas is consumed domestically for power generation and for petrochemicals, with consumption set to rise with the completion of the Shurtan petrochemical plant scheduled for completion at the end of 2000.  

 

ABB Lummus is constructing the $1 billion plant, and the majority of Uzbekneftegaz 's 2000 investment will be used to complete its construction.  

 

Uzbekneftegaz has also developed its domestic infrastructure. Its Kodzhaabad underground gas storage facility opened in 1999, allowing increased gas shipments to Uzbekistan's industrial heartland in the Fergana Valley. 

 

Uzbekneftegaz also commissioned the Khodjabad underground storage in the Andizhan region at a cost of $72 million.  

 

As part of an effort to become self-sufficient in energy, Uzbekistan has been developing domestic uses for its plentiful gas, such as converting cars and trucks to run on compressed natural gas (CNG) instead of gasoline and developing a network of CNG filling stations.  

 

A joint venture with American Engineering Incorporated is already under development for this purpose. The number of CNG stations will eventually increase from 33 stations currently to 360.  

 

Plans call for the gradual conversion of 2,000 vehicles from gasoline to compressed natural gas.  

 

However, the program has run into difficulties because of government-controlled fuel prices that make CNG uncompetitive, and because of investor difficulty in raising capital for the conversion program. 

 

Rising domestic gas consumption has reduced the amount of gas Uzbekistan has available for export.  

 

Exports have also been discouraged by the lack of export pipeline alternatives to the Central Asia-Central Russia pipeline that connects Uzbekistan to Russia and the other republics of the former Soviet Union.  

 

Uzbekistan has made efforts to develop alternative export routes. One proposal calls for an expansion of the existing Central Asia - Central Russia pipeline system that would enable the Central Asian republics to export gas to European markets.  

 

Another alternative is to find new markets in Asia; Uzbekistan signed a memorandum of understanding with Turkmenistan, Afghanistan , and Pakistan in 1995 to participate in the Central Asia Gas (Centgas) pipeline project to export gas to Pakistan and possibly India. 

 

Uzbekistan could also participate in a proposed 5,000 mile-pipeline to bring gas from Turkmenistan , and Kazakhstan east to China.  

 

Uzbekistan has exported natural gas to Kazakhstan , Kyrgyzstan , Russia, and Tajikistan. Frequent non-payment by these republics has been a problem. Deliveries to Kazakhstan have also been halted several times, with unpaid debts the most commonly cited reason for the cutoffs.  

 

In October 1999, Uzbekistan agreed to renew exports to Kazakhstan, subject to adherence to a plan to pay $1.5 million in debt for past deliveries and payment guarantees. Uzbekistan has also reduced gas supplies to Kyrgyzstan more than once.  

 

In January 2000, deliveries were restricted again because of Kyrgyzstan's failure to pay overdue gas bills that totaled more than $400,000.  

 

Tajik officials said in January 2000 that Tajikistan and Uzbekistan had reached a new agreement on gas supplies under which Uzbekistan would supply Tajikistan with $25 million worth of gas in 2000 as payment for Uzbekistan's use of a transit pipeline that crosses the Leninabad region of northern Tajikistan.  

 

The two sides have been operating under similar mutual offset arrangements for the past few years. 

 

Uzbekistan serves as a transit center for gas from Turkmenistan.  

 

According to an agreement signed by Turkmenistan's President Saparmurat Niyazov and Gazprom's Rem Vyakhirev, supplies of Turkmen gas along the northern Uzbekistan-Kazakhstan-Russia route resumed on December 29, 1999.  

 

Turkmenistan is supplying 700 billion cubic feet of gas to Russia in 2000, and has agreed to increase shipments to 1.8 tcf in the long run.  

 

Coal:  

Uzbekistan produced 3.3 million short tons in 1998. Production is carried out by the Komir joint stock association for the mining and marketing of coal. Capacity utilization at its mines fell from 92 percent in 1985 to 30 percent by 1997.  

 

Komir plans to increase production by 50 percent following the completion of its modernization program.  

Uzbekistan's coal reserves are concentrated primarily in the Angren, Baisun, and Shargun deposits.  

 

The Angren coal deposit accounts for most of Uzbekistan's total production, and it is the largest coal deposit in Uzbekistan, containing about 2 billion short tons of mostly brown coal (lignite) that is used as fuel for Uzbekistan's power generation. 

 

Modernization of production facilities could significantly increase output, and Krupp Hoesch Stahlexport (Germany) has signed an agreement to provide new equipment and upgrade the mining operation there.  

 

The first contract is projected to increase production by more than 300,000 short tons annually. The Angren mine also has underground coal gasification technology in place to produce 18 billion cubic feet of gas for the Angren power station.  

 

Uzbekistan plans to upgrade mining operations at its other deposits as well. The Shargun and Baisun deposits are much smaller than the one at Angren.  

 

Additional investment at the Shargun deposit is expected to double or triple production of high-quality coal from current levels of over 200,000 short tons/year.  

 

Completion of a second mine at Baisun could quintuple the mine's production of over 100,000 short tons/year, and could ensure that Uzbekistan has a surplus of coal for export in the future.  

 

Other planned investment projects include upgrading of mines, recovery of kaolin and other by-products, and development of coal-gasification projects.  

 

Eelectricity:  

Electric power in Uzbekistan is generated primarily from natural gas powered thermal plants, with smaller amounts generated from coal and hydroelectric facilities.  

 

Uzbekistan currently has almost 12,000 megawatts (MW) of usable electric generating capacity, and plans to have an additional 4,000 MW through the rehabilitation of existing plants and the development of new plants.  

 

Uzbekistan's electricity is generated mainly from natural gas-powered thermal plants, with smaller portions coming from coal and hydroelectric facilities.  

 

The largest gas-fired plants are the Syr Darya and Navoi plants, which together account for about a third of all generating capacity in the country.  

 

Coal-powered facilities consist primarily of two plants located near the Angren open pit mine near Tashkent. In addition, 25 hydroelectric plants supply almost 15 percent of the country's electricity.  

 

Uzbekistan's Energy Ministry hopes to increase the country's electric generating capacity through several projects, including a $30 million renovation of the Syr Darya plant using funds from the European Bank for Reconstruction and Development (EBRD).  

 

Uzbekistan plans to reconstruct the Navoi and Tashkent power stations at a cost of $340 million.  

 

Mitsubishi has completed a feasibility study for the Tashkent station, and the Uzbek government is negotiating with the Japanese Foreign Economic Co-operation Fund to refurbish the stations.  

 

The Uzbek government has also prepared an electrical energy development program to 2010 which includes five large investment projects.  

 

Uzbekistan's plans also call for the modernization of unit #1 at the Talimardjan Power Plant, as well as the construction of new units.  

 

Installed capacity of the power station will be 3,200 MW, consisting of four energy units with a capacity of 800 MW each.  

 

In addition, ABB has begun a feasibility study of a $60 million project to rebuild the heat and power plant in Mubarek, increasing its capacity from 60 MW to 100 MW. 

 

Uzbekistan exports electricity to other former Soviet republics such as Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan.  

 

Some exports are part of an inter-governmental agreement between Uzbekistan, Kyrgystan, and Kazakhstan to cooperate in using the region's water and energy resources.  

 

Under this agreement, Kyrgyzstan supplies surplus power from its hydroelectric plants during the summer, and receives electricity during the winter, as well as natural gas.  

 

Uranium:  

Uzbekistan was the world's fifth largest uranium producer in 1998. In 1998, Uzbekistan produced 2000 metric tons of Uranium - nearly 6 percent of the world's total - and set a target production level of 3,000 tons by end-2000.  

 

Uzbekistan exported nearly $11 million in uranium concentrate to the United States in 1996.  

 

Uzbekistan's uranium reserves rank in seventh place worldwide. However, exploitation methods in Uzbekistan have changes as its conventional mines have closed, and production is now dependent upon in-situ leach technology. 

 

The Navoi Mining Enterprise has set up a joint venture with France's Cogema to develop the Sagraly deposit with an estimated 38,000 tons of reserves.  

 

Energy Overview:  

Minister of Energy and Fuel: Valery Atayev 

Proven Oil Reserves (1/1/2000): 0.6 billion barrels  

Oil Production (1999E): 213,000 barrels per day (bbl/d), of which 168,000 bbl/d is crude oil  

Oil Consumption (1998E): 139,000 bbl/d 

Crude Oil Refining Capacity (1/1/2000): 222,271 bbl/d 

Natural Gas Reserves (1998E): 74-88 trillion cubic feet (Tcf)  

Natural Gas Production (1999E): 1.96 Tcf 

Natural Gas Consumption (1998E): 1.43 Tcf 

Recoverable Coal Reserves (12/31/96): 4.4 billion short tons  

Coal Production (1998E): 3.3 million short tons (mmst)  

Coal Consumption (1998E): 3.1 mmst 

Electric Generating Capacity (1998E): 11.75 gigawatts 

Electricity Generation (1998E): 43.5 billion kilowatt hours (kWh)  

Electricity Consumption (1998E): 41.3 billion kWh  

ENERGY INDUSTRIES  

Organization: Uzbekneftegaz National Corporation state oil and gas company, Navoi Mining Enterprise (uranium) Komir (joint stock association for the mining and marketing of coal) 

Major Oil Fields: Mingbulok, Kokdumalok 

Major Oil Refineries (1/1/2000 capacity): Fergana (106,000 bbl/d); Alty-Arik (66,271 bbl/d); Bukhara refinery (50,000 bbl/d) 

Major Gas Fields: Gazli, Shurtan, Kokdumalak, Kandym 

Major Power Plants (capacity): Syr Darya (3,000 megawatts or MW), Tashkent (1,920 MW), Angren (1,800 MW), Navoi (1,250 MW)  

Source: United States Energy Information Administration 

© 2000 Mena Report (www.menareport.com)

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