Caspian Overview: Russia Befriends Uzbekistan
Russia has promised to invest $12bn in projects in Uzbekistan, after a huge gas refinery plant owned by Lukoil started, and Gazprom began taking more gas from the central Asian republic.
For now, Russia has invested about $6bn in Uzbekistan’s economy, mostly in the energy sector, where Russian giants Gazprom and Lukoil are deeply involved.
The landlocked state had expected to see 8% more spent this year than last on developing and upgrading the gas industry, but the Russian president, Vladimir Putin said after meeting his Uzbek counterpart Islam Karimov April 26 that there may be more investment in gas-related projects.
His statement came a week after starting the building of Lukoil's Kandym gas processing complex, at a cost of $3bn and with capacity of 8.1bn m3/yr.
Lukoil has been developing the Kandym fields with Uzbekistan state-owned Uzbekneftegaz under a PSA signed in 2004. The Kandym group includes six gas condensate fields – Kandym, Kuvachi-Alat, Akkum, Parsankul, Khoji and West Khoji. Lukoil also has a license for the Southwest Gissar development in Uzbekistan.
According to the company it has invested more than $3.5bn in Uzbekistan and it is the country's largest investor.
In mid-term perspective (2018), Lukoil plans to produce over 16bn m3/yr of gas in Uzbekistan.
On the other hand, Gazprom and Uzbekneftegaz signed a contract on March 15 for the purchase of 4bn m3 of Uzbek gas in 2016, or about 4 times more than 2015.
Russian-Uzbek energy relations are improving just when some of Uzbekistan’s huge projects with other foreign companies have been delaying.
South Africa's Sasol announced in March that the company is reviewing its plans to participate in a $5.6bn gas to-liquids (GTL) plant for production of synthetic fuel in Uzbekistan, citing the current low oil prices as its reason.
Uzbekistan announced in early 2016 that the country's upstream gas sector would receive $2.798bn this year, about 8% more than the previous year. The sum comprises $2.1bn in foreign investments. According to BP’s statistical review, the country produced 57bn m³ of gas in 2014, the latest year for which BP data is available.
Another central Asian country Kazakhstan announced this week that its gas production increased by 3.1% to 12.25bn m3 in the first quarter of 2016, compared to 1Q15.
Turkmenistan looks east
Coming to Turkmenistan, it is pursuing an ambitious gas diversification project, looking to new gas markets. Having 85% share in the $10bn Turkmenistan-Afghanistan-Pakistan-India pipeline, Ashgabat has already started to build its 214-km section.
The 1800-km line is planned to deliver 33bn m3/yr of Turkmen gas to the member states by 2020, but the project's costs equal a third of Turkmenistan’s 2016 budget spending.
During the visit of the president, Gurbanguly Berdimuhamedov, to Saudi Arabia from May 1-3, he invited Riyadh and Doha to become involved in Tapi, so far with no results.
In the west side of Caspian Sea, Azerbaijan has accelerated gas projects.
Azerbaijan's state energy company Socar launched a new production platform, #6, in the offshore Bulla Deniz gas and condensate field on May 2.
The platform, designed and built by Socar’s engineering and building arm, has four drilling slots for one appraisal and three production wells.
Each well is expected to produce around 500,000 m³/day of gas and 150 metric tons/day of condensate, Socar said.
On the other hand, the Shah Deniz consortium announced on May 3 the award of a $1.5bn contract for the transport and installation of the deeper water subsea production systems for Shah Deniz Stage 2 to a consortium comprising BOS Shelf, Saipem Contracting and Star Gulf FZCO.
Wood Group PSN has also won a five year contract with BP-operated projects, valued at $500mn, to deliver services to eight facilities, offshore Azerbaijan.
Coming to the midstream, Vagif Aliev, head of Socar's investments department, told NGE on May 1 that there is no financial obstacle to developing the 1800-km Trans Anatolian pipeline (Tanap) project, which stretched from east to the west of Turkey to deliver Shah Deniz gas to domestic markets and EU.
Aliev said that the length of produced pipes for Tanap stood at 1088 km as of April 25, of which 893 km are positioned on the route from the Georgia-Turkey border to Eskishekhir. He added that about 475 km of these pipes were welded, and of those, 20 km had been laid in the trench.
Tanap is a part of Southern Gas Corridor, which links the other parts, South Caucasus Pipeline Expansion (SCPX) to the Trans Adriatic Pipeline (TAP).
Azerbaijan desk