UZBEKISTAN - The US E&P Role.

Tashkent has been trying hard to attract the biggest US oil companies as E&P partners and as developers of existing fields. These majors have big ventures in Azerbaijan, Kazakhstan and Turkmenistan. But they have been reluctant to invest in Uzbekistan because of its vague legal system.

During President Karimov's visit to the US in 1996, the government (now represented by UNG) offered four major areas for exploration, saying committed companies would enjoy a favourable tax regime and improved working relations with the state. These areas had infrastructure and operating costs were low. But the number of US companies that responded favourably was limited.

Enron was brought in to develop a group of 15 gas fields found by the Soviets in the Surhandarya and Bukhara regions. The fields were then said to contain 20 TCF of gas and 600m barrels of condensates. Enron's role was to be part of a 30-year PSA that was to be signed in partnership with Gazprom of Russia and UNG, entailing about $1.3 billion in investments. A preliminary agreement was signed in June 1996 by President Karimov and Enron's CEO.

With Enron as operator, some of the fields were planned to begin production in 1998 and to start exporting gas through the Russian pipeline system. But the deal was delayed as Gazprom did not approve the use of its pipeline network for exports beyond the CIS. Enron, which planned to recover 6 TCF of gas and most of the 600m barrels of condensates, abandoned this country in late 1998. Enron went bankrupt in late 2001.

The fields:

Kokdumalak, the biggest oil and gas field in Uzbekistan and a top priority for the government, is being developed further by a JV of MW Kellogg of the US, Nissho Iwai Corp. of Japan and UNG under a PSA signed in late 1994. The field was then said officially to have 97.8 million tons of oil, 96.3 million tons of condensates and 143.7 BCM of natural gas.

Kokdumalak, in the Amu Darya basin close to the border with Turkmenistan, was discovered in 1985 by Soviet geologists as a gas producer. In July 1997, Nissho Iwai and MW Kellogg completed construction of a $200 million gas compressor station at Kokdumalak, with the two companies putting in $163 million.

This project marked the first time any former Soviet republic had received medium-term funding by the US Export-Import Bank.

It was also the first time that a former Soviet republic received joint financing from the Japanese Export-Import Bank (now called Japan Bank for International Co-operation) and the Japan National Oil Corp. (JNOC) - the latter now known as Japan Oil, Gas and Metals National Corp. (JOGMEC), under Japanese Ministry of Economy, Trade and Industry  (METI).

A $20 million plant to utilise flared associated gas has been installed at Kokdumalak.

Now condensates are being piped from the field's compressor station to the southern town of Bukhara's 50,000 b/d refinery, and crude oil is being piped from Kokdumalak to the other refineries of the country.

Stan Cornelius, a small US company based in Seattle, has developed the main producing oilfield in the Ferghana basin, known as Mingbulak (meaning "a thousand springs"). The operation is a 50-50 JV with UNG.

Initial development work at the field was completed by end-1998.

Tashkent is hoping that, in the longer run, the field might be able to produce more than 200,000 b/d.