Integrating Central Asia into the World Economy: The Role of Energy and Transport Ifrastructure

Washington, DC

October 22 and 23, 2007

Oil and Gas Development in Uzbekistan:

Options and Prospects

Akhmat Arslanov

TECHNOLOGY TRANSFER AGENCY, UZBEKISTAN

Development of Oil & Gas Industry in Uzbekistan

•Exploration of oil fields in Uzbekistan started in 1885; •Natural gas field found first in Uzbekistan in 1953;•Transcontinental pipelines built when Gazli gas field found and extortion started in 1962;•Following development of Oil & Gas industry is due to the increase in extortion of hydrocarbons in Uzbekistan.

Gas and Oil resources in Gas and Oil resources in UzbekistanUzbekistan

Up to day 203 hydro carbon fields found:• Gas and Gas Condensate fields -104;• Oil-Gas and Oil-Condensate Fields - 99;• Exploited - 48%;• Explored - 34%;• 8 fields include all main gas resources, 2 of them yet

to be exploited;• 4 fields include all main oil resources, all of them are

in exploitation;• Resources will allow to keep current extortion level:

Gas – for 30 yearsOil – for 21 years

Gas and Oil fields in Gas and Oil fields in UzbekistanUzbekistan

Oil fields

Gas fields

Gas Production in UzbekistanGas Production in Uzbekistan

Oil Production in UzbekistanOil Production in Uzbekistan

Main Indicators of Uzbekistan Main Indicators of Uzbekistan Oil & Gas Industry in 2006Oil & Gas Industry in 2006

• Gas production - 55,6 mln cubic meters.;

• Oil and Condensate Production - 5,4 mln tons;

• Sulfur production - 166,3 thousand tons.;

• NGL production - 225,9 thousand tons;

• Polyethylene production- 125 thousand tons.

Primary energy consumption in Primary energy consumption in Uzbekistan in 2006Uzbekistan in 2006

NATURAL GAS 79%

OIL 16%

HYDROPOWER 3%

COAL 2%

Internal Energy ConsumptionInternal Energy Consumption

Consumed by

population, 37.60%

Consumed by other

industries, 50%

Gas & Oil indusrty needs, 12.40%

Most Energy Consuming IndustriesMost Energy Consuming Industries

Statistical discrepancies,

5%

Other industries, 17%

Chemical Industry, 8%

Power engineering,

50%

Uzbek Gas & Oil Industry,

20%

Gas & Oil Production Portion in Gas & Oil Production Portion in GPD in UzbekistanGPD in Uzbekistan

Power Intensity of GDPPower Intensity of GDP

0.660.60

0.310.26

0.19

0.38

0.57

0.360.31

0.27

0.60

1.03

19722

6458

19714

90248395

12964

4679

45912

9273

5881

12892

19873

0.00

0.20

0.40

0.60

0.80

1.00

1.20

0

10000

20000

30000

40000

50000

World Bank DataUzb

ekist

an

Russia

Kazakh

stan

Iran

Pakistan

Indi

aKor

eaCan

ada

USARom

ania

Turk

eyUkr

aine

KWT/hour KJ

Gas RefineryGas Refinery• Gas refinery: - Mubarek Gas Processing Plant – more than 29 bln

cubic meters; - “Shurtaneftegas” - 12 bln cubic meters; - Shurtan Gas Chemical Complex -4,5 bln cubic

meters. • Refinery products: - Dehydrated and purified gas; - Sulfur; - Condensate; - NGL; - Polyethylene.

Gas Transportation System Gas Transportation System Total extent of 13 thousand km; carrying capacity 55 bln cubic meters

Gas ExportsGas Exports• Gas export in 2006 -11,8 bln cubic meters

(current price - $100 per thousand cubic meters)

Gazprom - 9 bln cubic meters;

Kazakhstan - 1,45 bln cubic meters;

Kyrgyzstan - 0,7 bln cubic meters;

Tadjikistan - 0,65 bln cubic meters .• Gas export planned for 2007 - 14,3 bln cubic meters

Russia - 13 bln cubic meters (including KazMunaiGas SWAP operation - 3,5 bln cubic meters );

Kyrgyzstan - 0,7 bln cubic meters;

Tadjikistan - 0,65 bln cubic meters .

Oil and Condensate ProductionOil and Condensate Production

• Oil and condensate produced by 3 Plants: - Altiarik Refinery, Lubricants oriented production

3,2 mln tones; - Ferghana Refinery Fuels oriented production

5,5 mln tones; - Bukhara Refinery Fuels oriented production

2,5 mln tones.

Investment climateInvestment climate

• Favorable Investment Climate built for Oil & Gas industry, including preferences and privilege, further conditions improvement planned;

• Realization of 78 projects included into Uzbekistan Investment Program for 2007 attracting $ 1 billion of foreign investments.

Investment ClimateInvestment Climate

• Duty for use of mineral resources decreased in January 2007:

- Oil production - from 35% to 20%;

- Gas condensate - from 32% to 20%;

- Natural gas from - 58% to 30%.

• Excise-duty decreased in January 2007:

– Gasoline -from 45% to 28%;

– Diesel - from 40% to 25%;

– Kerosene - from 20% to 8%.

Investment Effectiveness and Investment Effectiveness and Dynamics at NHC “Uzbekneftegaz”Dynamics at NHC “Uzbekneftegaz”

CDM prospects in Uzbekistan CDM prospects in Uzbekistan (Oil & Gas)(Oil & Gas)

• CDM National Body founded at Ministry of Economics of Uzbekistan in December 2006;

• Number of PINs related to gas flaring at oil fields and reduction of gas loses during transportation were developed and registered;

• There is big potential in decreasing energy consumption within oil and gas production and transportation;

• PINs for 5 more projects are at preparation stage today.

GGas flaring as flaring in Uzbekistanin Uzbekistan

Satellite photo (World Bank)

Uzbekistan Gas Flaring Estimated Uzbekistan Gas Flaring Estimated From DMSP DataFrom DMSP Data

THANK YOU FOR YOUR THANK YOU FOR YOUR

ATTENTIONATTENTION

TECHNOLOGY TRANSFER AGENCY, UZBEKISTAN

Oil and Gas Development in Uzbekistan: Options and Prospects