On July 9, President Shavkat Mirziyoyev signed a decree “On measures for stable provision of the economy and households with energy resources, financial rehabilitation and improvement of the management system of the oil and gas industry.”
The document underscored the inefficiency of exploration, investment projects and pricing, as well as an outdated and non-transparent management system in the oil and gas sector, due to which the economy and the households are not being fully provided with energy resources.
The decree has approved the Uzbekistan’s Oil and Gas Sector Development Concept until 2030, prpeared jointly with foreign consulting companies and financial institutions, and the Republican Working Committee on the implementation of the concept headed by Prime Minister Abdulla Aripov.
A project office is to be created within the Ministry of Energy which will be in charge of coordinating the reforms in the oil and gas sector.
The decree approved proposals to improve the management system and organizational structure of Uzbekneftegaz, prepared with the technical assistance of the Asian Development Bank.
Uzburguneftegaz, Uzneftegazqazibchiqarsih, Uzneftmahsulot and Uzneftegazmash will be merged into Uzbekneftegaz, thus reducing redundant intermediaries in the holding’s management system. The oil and gas producing, as well as gas processing entities shall also be transformed into structural units (authority, plant) of Uzbekneftegaz.
Uztransgaz is being withdrawn from Uzbekneftegaz. Hududgastaminot JSC is to be established on the basis of Uztransgaz’s territorial gas supply branches to operate gas distribution networks and supply natural and liquefied gas to households and social facilities. Uztransgaz shall become the only operator for the purchase of natural gas from mining companies for further transportation, including export and import, as well as for sale to consumers connected to main gas pipelines, while Hududgastaminot – for consumers connected to gas distribution networks.
It is planned to transfer step-by-step the gas supply facilities to private operators for operating gas distribution networks, as well as the sale of natural gas to consumers under public-private partnership terms.
Until 2022, all categories of natural gas consumers should be covered by an automated meter reading system.
Non-core assets of Uzbekneftegaz and its member enterprises will be sold out. Their stakes in markets, trade and livestock complexes will be transferred to local authorities.
1381 gas stations owned by Uzneftemahsulot are to be sold through auctions. Until October 1, the government should submit proposals on hiring to executive positions at Uzbekneftegaz, Uztransgaz and Hududgaztaminot of managers with work experience in big foreign companies or international companies.
The decree provides for the attraction, before 2025, of investors to Uzbekneftegaz and Uztransgaz through the initial and secondary public offering on domestic and international stock markets, while maintaining the state’s share in authorized capital of at least 51%.
The implementation of the concept is expected to increase gas production up to 41.1 BCM in 2021 and to 42.3 billion in 2024, as well as attract investments for geological exploration and production of at least US$ 1.2 billion by 2020 and 1.8 billion – by 2024. The production of petroleum products is planned to increase by 2.1 times – up to 3.2 million tons per year by 2024, liquefied gas – up to 1.5 million tons.