Lukoil to sell 5 bcm of gas from Kandym to Uzbekistan per year

MOSCOW, Mar 5 (PRIME) -- Russian oil major Lukoil has agreed with Uzbekistan to sell up to 5 billion cubic meter of natural gas produced at the Kandym project per year on the internal market with a 12.5% discount to the export netback, Lukoil Senior Vice President for Oil and Gas Production Azat Shamsuarov said in a conference call on Tuesday.

In 2018, Uzbekistan’s debts for gas sold by the company increased to U.S. $600 million as the country started to syphon off gas from the project for the internal market, he said.

“During negotiations on debt redemption, the Uzbek side said that a swift redemption was impossible, and notified the company of the need to take off gas for the internal market in the future. In order to stabilize the situation, we agreed to restructure the debt for two years with equal monthly payments secured by guarantees of the Uzbekistan’s Finance Ministry. The payments have already started,” he said.

“We also undertook the obligation to sell gas to the internal market amounting to up to 5 billion cubic meters per year with a discount of 12.5% to the weighted average export netback. Supplies will be done with a prepayment. We think that the agreements form a stable base for further operation of our projects and for return on investment.”

Lukoil launched the Kandym gas processing plant in Uzbekistan with a capacity of 8 billion cubic meters per year in April 2018, five months ahead of schedule, he added.

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