(bne IntelliNews) – Russian entrepreneur and infrastructure investor Andrey Filatov has joined a consortium of investors for the $2bn development of the 25 Years of Independence gas field in Uzbekistan under a production sharing agreement (PSA), a November 29 press release from the businessman said.
The commitment comes amid an albeit cautious opening up of the Uzbek economy, where until now major Lukoil has been the only significant Russian investor in the oil and gas sector. Filatov speculates that more international investors, including those from Western countries, could follow if the current policies continue.
“An ongoing massive government programme [in Uzbekistan] to step up conversion and boost exports of finished products envisions, among others, creating a favourable investment climate and attracting new foreign investors,” said Filatov in the statement.
The businessman — who is also senior coach of the Russian national chess team — commented that Uzbekistan “demonstrates openness and has been creating new opportunities for business”. In recent months, steps taken by the country’s new President Shavkat Mirziyoyev to open up the economy include the lifting of currency controls which had long inhibited foreign investment.
The development of the 25 Years of Independence gas field is part of the PSA for the O’zbekiston Mustaqillik investment block signed on April 5, during Mirziyoyev’s official visit to Russia. The reserves of the 25 Years of Independence gas field and the O’zbekiston Mustaqillik investment block are estimated at more than 100bn cubic metres (cm).
The project will also include the construction of a gas chemical complex in Uzbekistan’s Surkhandarya region. Financing for the project will be carried out via direct investments and loans from international financial institutions.
The consortium of investors includes Gas Project Development Central Asia AG, Altmax Holding and Uzneftegazdobycha. Filatov will participate in the consortium through Brighttree Holding, a special-purpose vehicle that has taken a 50% stake in Altmax Holding. His share in the gas field development project will amount to 37.5%.
The gas field development will be operated by the Surhan Gas Chemical Operating Company, established by the consortium. Gas field service companies Halliburton, Baker Hughes, Schlumberger and National Oilwell Varco were also contracted for the projected.
The gas field development will be completed in two phases. In the initial stage, to be carried out in 2017-2018, the consortium plans to drill a confirmation well, confirm the reserves, develop a feasibility study and sign commercial terms and conditions, the statement said.
This will be followed by the second stage comprising field development, geological exploration, the construction of a gas conversion facility and a gas chemical complex to produce high added-value products.
“[The gas field] will become a raw material base for the gas chemical complex in the Surkhandarya region,” the statement added. The complex will produce polyethylene, polypropylene and sulphur. In future, gas conversion is expected to deepen to produce olefins (ethylene glycol, rubber, polyethylene terephthalate and other products).
The project will have a 35-year time frame, the statement added.
Existing Russian investor in the sector Lukoil, which has been in Uzbekistan since 2004, also has plans to ramp up in the country. The Russian major is developing six gas condensate fields as part of the Kandym Early Gas Project in Bukhara region. It plans to boost its gas output in Uzbekistan to 16bn cm per year by 2020, up from 9bn cm the company plans to produce in 2017, it said in September. The boost is expected from an annual 8bn cm produced at the Kandym group of fields, 3bn cm at the Khauzak field and 5bn cm at the Gissar project.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.