Production Sharing Agreements with Republic of Uzbekistan inked
Headed by the Management Committee Chairman Alexey Miller, Gazprom’s delegation took part in an extraordinary session of the Eurasian Economic Community (EvrAzES) in Saint-Petersburg, holding meetings with Islam Karimov, President of the Republic of Uzbekistan and Abdusalom Azizov, Chairman of the National Holding Company Uzbekneftegaz.
Alexey Miller and Islam Karimov discussed issues in relation to a Production Sharing Agreement (PSA) for Ustyurt fields.
The parties signed an Accord on the major principles and provisions of PSA for the Urga, Kuanysh and Akchalak group of fields in Uzbekistan’s Ustyurt region.
Under this Accord, Gazprom will provide a feasibility study and finance required for oil and gas businesses within PSA. The natural gas produced from Ustyurt fields will be marketed via an integrated export channel of Gazprom and Gazexport.
The parties agreed to develop and sign a 25-year PSA in the first half of 2006.
The talks with Gazprom and Uzbekneftegaz resulted in an Agreement on the major principles of geological survey for Uzbekistan’s Ustyurt investment blocks and subsequent field development under the PSA terms.
In accordance with the Agreement, Gazprom will develop a stage-by-stage geological exploration program for the Ustyurt investment blocks and, in case of new field discoveries, will have an exclusive right to negotiate with Uzbekistan their development under the PSA terms.
To successfully implement the Agreement the parties will establish a Managing Committee.
The parties expressed a common opinion that the technical know-how and experience of both firms in the prospecting sector would contribute to the most efficient project development.
Uzbekistan’s total natural gas resources exceed 6.25 tcm, including 1.62 tcm in commercial reserves. At present the Republic extracts some 60 bcm of gas per year, including 5 bcm exported to Kazakhstan, Kyrgyzia and Tajikistan. With first imports launched in May 2003, over 2005 Russia acquired some 8 bcm of Uzbek gas and 9 bcm is slated for 2006.
The National Holding Company Uzbekneftegaz and Gazprom signed an Agreement on strategic cooperation on 17 December 2002. In particular, the Agreement stipulates long-term procurement of Uzbek gas between 2003 and 2012, Gazprom’s involvement in natural gas production in Uzbekistan under the Production Sharing Agreement (PSA) terms as well as cooperation in developing Uzbekistan’s gas transmission infrastructure and channeling Central Asian gas via the Republican territory. Cooperation under the PSA terms (effective from 14 April 2004) while resuming gas production from the Sakhpakhty field is a joint pilot project in the gas extraction sector. Said project (0.5 bcm of annual extraction) opens way to implementing under the PSA terms a larger project on exploration and production of gas in Uzbekistan’s Ustyurt region.
In July 2005 the parties endorsed a Schedule for the preparation and signing of PSA on the geological exploration and development of Ustyurt fields.
On 5 February 2005 Gazprom and Joint-Stock Company Uztransgaz (an Uzbekneftegaz subholding) sealed a midterm Agreement on natural gas transmission via the Republic of Uzbekistan over 2006 to 2010, pursuing the objective of transporting Central Asian natural gas, primarily of Turkmen origins, by the Central Asia – Center (CAC) and Bukhara – Ural gas transmission networks running through Uzbekistan.
Information Directorate, OAO Gazprom