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Uzbekistan approves new major gas processing plant construction

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gpzUzbek President Islam Karimov approved a conclusion of contract between the Lukoil Uzbekistan Operating Company Ltd. (subsidiary of Lukoil in Uzbekistan) and Korean Hyundai Engineering Co. Ltd. for the construction of a gas processing plant (GPP) and arrangement of Kandim group of deposits worth $2,662 billion.

A consortium led by Hyundai has won a tender to select a contractor for the project on construction of a gas processing plant and arrangement of Kandim group of fields, which was announced by the Russian company late 2013, the resolution of the head of state said Nov.24.

President of Uzbekistan approved the proposal of the National Holding Company (NHC) Uzbekneftegaz and LUKOIL National company (NC) on the conclusion of contract with the Lukoil Uzbekistan Operating Company for the supply of equipment, construction of a gas processing plant and arrangement of Kandim group of fields on a “turnkey”, the total cost of which amounts to $2,662 billion.

In accordance with the decree, the first stage of Kandim GPP will be commissioned before July 1, 2018.

In addition, the president of Uzbekistan extended for seven years the validity of the Production Sharing Agreement (PSA) with respect to the site of Kandim group of fields, sites of Khauzak and Shady, as well as Kongirat.

The conclusion of a 10-year long-term framework agreement with Uztransgaz JSC for export of natural gas produced under the PSA has been approved by the decree.

Uzbekneftegaz and Lukoil must submit the feasibility study (FS) of the project “Construction of a complex of the gas processing plant and arrangement of Kandim group of fields” for approval to the Cabinet of Ministers of Uzbekistan until April 1, 2015.

Ministries and departments of Uzbekistan jointly with LUKOIL NC were instructed to prepare a draft decision on provision of Kandim GPP with external power supply facilities and infrastructure construction and submit it for approval to the government in one month term.

Earlier, it was reported that Lukoil plans to build a gas processing plant with a design capacity of 8.1 billion cubic meters of gas per year within the framework of the Kandim project. Investments in the project, together with the arrangement of the six gas condensate deposits, were estimated at more than $3 billion.

The first phase of the project is designed for production of 2.1 billion cubic meters of gas per year from the Kuvachi-Alat field and the North Shady section of the Khauzak-Shodi deposit with the supply of gas to the Mubarek gas processing plant.

In 2004, Lukoil and Uzbekneftegaz signed PSA for Kandim-Khauzak-Shodi block, which provides for natural gas production in the Bukhara-Khiva region in the southwest of Uzbekistan. In autumn 2007, commercial production at the Khauzak site was launched.

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