Uzbekistan in Line for $650mn Russian Loan

Russian state development bank VEB.RF, in partnership with other Russian lenders, is set to provide a $650mn loan to Uzbekistan's national oil company Uzbekneftegaz (UNG) to help it increase its hydrocarbon production.

UNG said on November 23 it had signed a memorandum of understanding on the funding with VEB.RF, adding that the goal of the project was to provide Uzbekistan's economic sectors and population with sufficient energy resources.

Since president Shavkat Mirziyoyev came to power in late 2016, Uzbekistan's government has sought to expand gas production by opening the sector up to foreign investors and implementing a series of reforms. But progress has been slow and growth targets have not been met.

Russian investors and contractors play a major role in Uzbekistan's upstream sector. Russian oil firm Lukoil serves as the country's biggest foreign investor and its second-largest gas producer after UNG. Earlier this month UNG opened a €40mn ($48mn) credit line with VEB.RF, to fund the purchase of Russian equipment and services for drilling and exploration operations.