10 July 2019

Reforms in the oil and gas industry defined

The President of the Republic of Uzbekistan signed the Resolution “On Measures for the Stable Provision of the Economy and the Population with Energy Resources, Financial Recovery and Improvement of the Oil and Gas Industry Management System” in order to fully meet the needs of the economy and population of the republic in energy resources, ensure the financial recovery of oil and gas enterprises and create favorable conditions for the development of healthy competition, the introduction of modern digital technologies and advanced management techniques based on e generally accepted international practice.

The document notes that, together with international consulting companies and international financial institutions, a Concept for the development of the oil and gas industry of the Republic of Uzbekistan until 2030 was developed, and a Republican Working Committee for the implementation of this Concept was formed.

The resolution approved proposals to improve the management system and organizational structure of Uzbekneftegaz, prepared with the technical assistance of the Asian Development Bank.

Uzburneftegaz, Uzneftegazdobycha, Uznefteprodukt and Uzneftegazmash join the Uzbekneftegaz companies, thus reducing redundant intermediaries in the holding’s management system. Oil and gas producing and gas processing organizations are also transformed into structural units (administration, plant) of Uzbekneftegaz. In turn, Uztransgaz is being withdrawn from Uzbekneftegaz.

“Uztransgaz” is determined by a single operator for the purchase of natural gas from mining organizations for further transportation, including export and import, as well as sale to consumers connected to main gas pipelines.

A phased transfer to the management of private operators of gas supply facilities is planned for the implementation of the functions of operating gas distribution networks, as well as the sale of natural gas to consumers under public-private partnership conditions.

In addition, the sale of non-core assets of JSC Uzbekneftegaz and its member enterprises will be implemented by applying a step-by-step reduction in the starting price in the absence of bidders within a month from the date of bidding.

The main task of JSC “Uzbekneftegaz” is to increase the production of hydrocarbons, including natural gas – up to 42.3 billion cubic meters. m and liquefied gas – up to 1.5 million tons in 2024, ensuring full satisfaction of the needs of industries and population, as well as the company’s profitability, including through:

attraction of large world oil and gas companies to the extraction of hydrocarbons in fields with hard-to-recover reserves based on widely used conditions and mechanisms in foreign investment practices;

increasing operational efficiency and optimizing the costs of oil and gas enterprises, as well as reducing their debt burden by attracting independent international experts;

intensification of hydrocarbon production in developed fields based on modern technologies;

attracting in 2020–2022 at least 6 foreign oilfield service organizations to participate in international tender for the implementation of investment projects carried out by national oil and gas companies;

widespread introduction into the activities of modern information and communication technologies, taking into account international experience, including based on the implementation of the Digital Field concept;

critical study and optimization of investment projects in the oil and gas industry with the involvement of international consulting companies based on the real financial capabilities of domestic oil and gas companies.