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Oil-and-gas passion of Uzbekistan

Uzbekistanby Andrew Karnilov

It looks like the climate for large Russian oil-and-gas companies in Uzbekistan coincides with the caprices of Tashkent weather.

This is indicated by frequent visits of the heads of Russian companies JSC Lukoil and JSC Gazprom to the sunny republic to meet with the Uzbek Oil-and-Gas Corporation and Uzbek Government. On February 10 and 11, 2011 there were negotiations held with the delegation from JSC Lukoil led by the vice-president A.R.Kuzyaev.

According to the official data the following issues were discussed at the negotiations: gas deliveries for 2011 and prospects of production distribution with the growth of production on Lukoil projects in Uzbekistan in 2016-2017. It is known that Lukoil has invested more than US $1 billion in Uzbekistan and intends to draw US $3 billion more. As mass-media state, the plans of Lukiol for 2016-2017 are to yield up to 19 billions cubic meters of gas in boreholes of Uzbekistan. But then the issue of customers arises.

The most probable outlet is China with its high industry growth rates. China is able to use energy resources in any volume. Installation of Turkmenistan-China gas pipeline may become a favorable factor.

Gazprom is a business rival of Lukoil in the Uzbek market. Gazprom has been the main customer of Uzbek gas for a long time, and indicates itself as a strategic partner of Uzbekistan. Through the whole period of cooperation there has not been any serious conflict with the Uzbek colleagues (at least visible).

According to the available information, Gazprom made a contract to import more than 10 billion cubic meters of Uzbek gas in 2011.

Meanwhile Gazprom is not only interested in purchasing gas, but implementing investment projects as well. Thus, the Russian corporation takes part in exploration work in Ustyurt region, geological examination of Uzbekistan’s part of Aral Sea with further field development of new-opened hydrocarbon deposits on terms of the Production Sharing Agreement. Assessments show that Gazprom’s investments total more than US $300 million.

However, the opinion that Russian companies’ business in this field is cloudless would be wrong. Recently there has been information spread in Russian mass-media and Internet on tension emerging between JSC Gazprom and Lukoil and their Uzbek partners, the reason of which is Islam Karimov’s daughter Gulnara Karimova, who interferes in these structures’ affairs.

In particular, it is mentioned that interference of Gulnara Karimova’s inner circle in tenders and projects, held by Lukoil Overseas Uzbekistan displeases Lukoil management. Especially concerning projects on construction of gas processing plants in Bukhara Region.

It is also known that during the years of cooperation Gazprom through its affiliated companies has invested considerable funds to develop joint ventures Gissarneftegaz and Kokdumalakgaz. Its business partner was Mirodil Djalolov, the head of Zeromaks Company, ex-attached person of the above mention person. Well-informed sources state that arrest of Djalalov, caused curtain problems of Gazprom and fear for its business.

After the head of Zeromaks Company had left the scene, sharing out of his “empire” started. The first pretender for the major portion of his property is Gulnara Karimova. As Wikileaks says – owing to her, an unknown firm turned into a large oil-and-gas corporation in a short period of time. For the last 6 months Gazprom has not been able to settle with its Uzbek colleagues these joint ventures’ further destiny. Gulnara Karimova easily cancels the Uzbek Government’s decisions. The persons have taken part in negotiations mention that Uzbek officials cannot approve any document without her opinion. It is likely that Gazprom management should shift its gears and develop personal contacts with Miss Karimova.

But there is another issue – loans of Zeromaks. The Company owes foreign companies a lot of money. Well-informed sources state that the funds were embezzled by Gulnara Karimova’s structures, though the ex-head of Zeromaks had to pay his liberty for this. Uzbekistan experienced fuel crisis due to embezzlement of the funds, directed for new drilling equipment and other processing tools, and debts to foreign partners.

There is still fuel deficit at the present time there. Oil-and-gas sector management does not dare make any decision to control the fuel deficit. Arrest of I.Vagapov, former head of Uztransgaz Company and his being under investigation, as well as dismissal of E.Shaismatov, deputy Prime-minister who supervised oil-and-gas sector are fresh in mind. Gulnara Karimova, the main person responsible for the fuel crisis has purchased a luxurious mansion, built on one of the picturesque bays of Switzerland.

Islam Karimov pretends he knows nothing. High-ranking Uzbek officials are afraid to report the actual state of things in oil-and gas sector. It is more trouble than it worth. The family is happy with the situation. But, it is for the time being.

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