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    Uzbekistan to Shake Up Gas Sector


The under-performing business, with its poor record of corruption, needs to be offloaded, the government of Uzbekistan says.

by: Dalga Khatinoglu, Ilham Shaban

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Natural Gas & LNG News, Asia/Oceania, Premium, Corporate, Political, Ministries, Privatisations, TSO, Infrastructure, Pipelines, News By Country, Uzbekistan

Uzbekistan to Shake Up Gas Sector

Uzbekneftegaz’s gas transport subsidiary Uztransgaz must be demerged from the state gas company and its 49% stake sold to private investors, the central Asian country's president Shavkat Mirziyoyev ordered July 10. Gas networks will also be transferred to the management of private operators, as part of the national gas market shake-up announced two months ago.

Mirziyoyev said the company had performed poorly for decades under state management and had suffered from heavy corruption. A fifth of the gas transported through the grid is lost.

The order says that although overall gas production rose 8% over the last 20 years, Uzbek enterprises were overall down by 29% in terms of output.

Russian companies however have been investing, notably privately-held Lukoil, which last year produced 13.42bn m3.

Uzbekistan had to purchase a part of Lukoil’s gas share to meet its domestic demand, but failed to pay, leaving it in $600mn in debt at the end of 2018. It has raised gas prices for the domestic market five times since 2014 with a further increase soon in order to dampen demand and save on subsidies.

The Asian Development Bank has helped Uzbekistan to make reforms in its energy sector, especially on planning the privatisation of Uzbekneftegaz, which owns close to 200 subsidiaries. 

The president also ordered the government to adopt an energy efficiency improvement program for 2020–2022 within the next three months. In 2018, crude oil production in Uzbekistan fell 8.2% year-on-year to 746,400 metric tons, though its overall oil and gas condensate production went up 4.5% to 2.9mn mt. Sale gas production also increased by 6.1% to 56.6bn m3.