Total investments in the Kandym-Khauzak-Shady project are expected to reach 1 billion dollars. Its maximum production capacity is put at an annual 8.8 billion cubic meters of gas; with the initial-stage capacity at 2.8 billion. And the total amount of gas to be recovered under this project may come to 207 billion cubic meters.
The newly signed agreement will be valid for a period of 35 years, Lukoil President Vagit Alikperov told reporters after the signing ceremony. The extraction of gas under the Kandym-Khauzak-Shady project is to start in 2007.
"The realization of a project in Uzbekistan is fully consistent with Lukoil's development strategy, which envisages accelerated development of the gas sector and transformation into a multi-line oil and gas company," the Lukoil President pointed out.
Lukoil holds 90 percent in the investor consortium while Uzbekneftegas has 10 percent.
Proven gas reserves on the area covered by the Lukoil-Uzbekneftegaz contract amount to an estimated 283 billion cubic meters. The largest of the deposits, Kandym, has over 150 billion cubic meters of natural gas.
In addition, the Kandym-Khauzak-Shady project provides for the construction of a modern chemical plant to process up to 6 billion cubic meters of gas a year; the first leg of the plant is to be commissioned in the year 2010. It also envisaged is the drilling of 240 development wells and the construction of pipelines with a total length of 1,500 kilometers. Other installations to be erected as part of the project include two compressor stations, assembly facilities, high-voltage transmission lines, a 40-kilometer rail track, and motorways.
The project is expected to create a lot of new jobs for the Uzbek population and to provide opportunities for local building contractors and companies involved in the services sector. The recovered hydrocarbons will be distributed via pipeline networks operated by the Russian gas giant Gazprom.
UzLITIneftegas, a subsidiary of Uzbekneftegas, has prepared feasibility studies for the Kandym-Khauzak-Shady project while the U.S. law firm Baker & McKenzie has elaborated the production sharing agreement. Both drafts have gotten a stamp of approval from an Uzbek government commission regulating the use of subsoil resources and authorizing production sharing agreements.
Lukoil Overseas, the operator of Lukoil's international projects, opened an office in the Uzbek capital of Tashkent in February 2003.
