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    Uzbekistan to Start Gas Grid Upgrade Tenders

Summary

Contract awards are expected to be significant, as is Tashkent's ambition to reduce losses from its gas system.

by: Dalga Khatinoglu

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Uzbekistan to Start Gas Grid Upgrade Tenders

Uzbekistan plans to start tenders for the modernisation of its trunk gas transmission system and gas flow management (SCADA) in 2019 with contracts expected to be worth around $1.5bn, Akmal Eshonkulov, head of the gas pipelines and facilities department at state-run Uztransgaz announced December 6.

The project is expected to complete in 2021 and aims not only to reduce losses from the gas grid by at least 7% but also to automate all management processes.

State-run Uzbekneftegaz signed a memorandum of understanding with US-based Honeywell UOP on cooperation in the framework of the SCADA project. Recently, Uzbekistan also discussed the same issue with the CEO of Baker Hughes GE during his recent visit to Tashkent.

The gas losses - both from the upstream sector and transport grid- are very high in the country. President Shavkat Mirziyoyev said in December 2018 that the volume lost during production and transportation equates to 20%-23% of gross gas production. Sources indicate that most losses are from the gas grid.

Last year, Uzbekistan produced 53.4bn m3 sales gas, compared to 60.9bn m3 in 2007 and its consumption stood at 41.6bn m3, comparing to 48bn m3 in 2007, according to BP statistics. The country exported 1.7bn m3 to Kazakhstan, 6.7bn m3 to Russia and 3.4bn m3 to China last year.

According to the Uzbek Statistics Committee, the country’s sales gas production during 9M2018 increased by 7.1% year-on-year to 44.45bn m3, condensate increased by 12.9% to 1.58mn metric tons, whereas crude oil output reached 561.5mn mt, down 9.6%. The amount of gas flared in Uzbekistan reached 849mn m3 in 2017, according to World Bank data, having declined each year from 1.49bn m3 in 2013.

The country has increased gas prices for domestic market five times since 2014 with a further increase due mid-2019 in order to dampen demand and the amount spent on subsidising consumer gas prices. According to the International Energy Agency, Uzbekistan's subsidies last year totalled $3.8bn for gas (up 4.9% year on year) and $1.3bn for electricity (up 52%), together representing 12% of GDP.