ADB to allocate new funds to Lukoil for gas project in Uzbekistan
By Aynur Jafarova
The Asian Development Bank (ADB) plans to provide additional funds to the Russian Lukoil company for implementation of the Kandym project in Uzbekistan.
The additional funding worth $150 million will be allocated in the form of credit and guarantees on commercial risks, ADB said on August 15.
In March 2012, Lukoil Overseas Uzbekistan Ltd. (fully owned subsidiary of Lukoil) signed an agreement with a consortium of banks for allocation of a loan worth $500 million for the implementation of the Kandym Hauzak-Shady-Kungrad project in Uzbekistan.
The consortium included ADB, Islamic Development Bank (IDB), Credit Agricole CIB, BNP Paribas (Suisse) SA and the Korea Development Bank (KDB).
As a member of the consortium, ADB has provided the Russian company with a loan worth $100 million and guarantees on risks for the commercial part of the financing in the amount of $200 million.
The loan was provided to finance the investment program of development of Kandym group of fields and production increase on the territory of Hauzak-Shady.
The participants of the Kandym-Hauzak-Shady-Kungrad project -- LUKOIL (90 percent) and Uzbekneftegaz National Holding Company (10 percent) -- should equip and put the Kuvachi and Alat Kandym group field as well as the northern part of Dengizkul field of Shady sector into the development until December 30, 2014.
Kandym group consists of six gas condensate fields. Recoverable reserves of the project are 330 billion cubic meters of gas, and the planned level of production is 11 billion cubic meters of gas per year.
The Production Sharing Agreement (PSA) on the project was signed in 2004. Three years later, a group of deposits of Hauzak-Shady was put into operation. As of the beginning of 2014, cumulative production at the Khauzak-Shady was 20 billion cubic meters of gas.
Currently, Lukoil works in Uzbekistan on the implementation of the three projects - Kandym-Hauzak-Shady-Kungrad, the mining of the Southwestern Hissar, and the conduction of exploration of the Uzbek part of the Aral Sea in the international consortium.
Lukoil plans to produce 18 billion cubic meters of gas annually by 2017 and to increase the amount of investments up to $5 billion within the frameworks of the first two projects.
Uzbekistan joined the ADB in August 1995. Currently, the portfolio of cooperation between Uzbekistan and the ADB includes 40 projects worth $14.5 billion.
Uzbekistan and the ADB are jointly implementing the strategically important investment projects and programs such as the construction of two steam gas units with a total capacity of 900 MW at the Talimarjan thermal power plant, a large scale program of road construction and reconstruction, building the Ustyurt Gas Chemical Complex at Surgil deposit and a housing program in rural areas.