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UZBEKISTAN - Independent Export Pipelines

The third priority is for Uzbekistan to have export outlets not dependent on Russia. As relations with the Shiite Islamic regime of Tehran are not close, with Tashkent suspicious of any religious politics, the Uzbek leadership does not want outlets dependent on Iran.

Government officials, from President Islam Karimov down, have been discussing pipeline options with a number of Western companies, mainly US firms having a strong lobby in Washington. President Karimov is pursuing the matter also with US figures acting as advisors.

Under a government plan, oil production in Uzbekistan should rise from the current level of almost 190,000 b/d to 450,000 b/d by 2001 and to over 600,000 b/d by 2006. Uzbekistan's consumption of oil has fallen from 230,000 b/d in 1985 to less than 130,000 b/d now. This is not likely to increase much in the coming years because the country is shifting to gas in a big way.

According to a government source in Tashkent, Uzbek oil consumption by 2001 would be less than 150,000 b/d. This means 300,000 b/d would be exported in crude form and in locally processed products by 2001 and the volume would exceed 500,000 b/d by 2006.

The source tells APS that Uzbekistan needs a crude oil export outlet for more than 500,000 b/d to be ready by 2006. He says if an export pipeline bypassing Russia and Iran has been completed by then, Uzbekistan's E&P prospects would improve significantly and the oil production capacity may reach 1 million b/d or more before 2010.

He says the best option is the US proposed system of oil and gas pipelines across the Caspian Sea to Turkey. He says President Karimov believes this is "the only viable option" for Uzbekistan's future exports to the West and a pipeline to China is the only viable option for exports to the Far East.

Uzbek gas exports, limited to the CIS markets, this year are expected to jump to about 13.3 BCM, from 9 BCM in 1997. Under the government plan, production of gas by 2000 should reach 60 BCM/year and the volume may exceed 65 BCM/ year by 2006. This means Uzbekistan would need independent export outlets for more than 18 BCM/year by 2006.

Gas exports to Kyrghyzstan were suspended in August 1998 because it had not paid a debt of $2.5 billion accumulating since the start of the year. But after the Kyrghyz government made a written guarantee that it would pay its bills on time, Uzbek exports were resumed on a phased basis. Under a bilateral agreement, the Kyrghyz government pays half its gas bill in cash and the other half in agricultural products and water.

The Kyrghyz state distributor of gas had not been paid by its customers. After it gave Tashkent a written guarantee, the government issued tighter measures forc-ing the customers to pay their gas bills on time. The state distribution company has also raised its sale price by 25% to offset a large deficit.
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Copyright 1998, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:APS Review Oil Market Trends
Date:Oct 5, 1998
Previous Article:UZBEKISTAN - The National Priorities
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