February 2005

Hydrocarbon Developments:

OIL PIPELINES:

ODESSA-BRODY OIL PIPELINE

• European Investment Bank ready to finance Odessa-Brody pipeline to Gdansk.

The European Investment Bank is ready to finance the construction of the Odessa-Brody pipeline on Polish territory to Gdansk, EIB President Wolfgang Rot declared recently. A total of 500 mln Euro is needed to build the oil pipeline in Poland, and according to the Polish media, the EIB is prepared to invest these funds. Previously European experts frequently supported the idea of the Polish-Ukrainian oil pipeline, but they were very cautious when it came to specific plans to finance the project. The experts believe that the EIB may finance this project on certain conditions, but no details of these conditions were announced. The idea of this bank financing the project is due to Poland's entry into the EU and the bank's desire to invest funds in improving Polish infrastructure in general.

Source: WBJ (Warsaw) 14.02.2005

• Polish-Ukrainian pipeline gathering speed.

A preliminary business plan to construct a new Polish-Ukrainian oil pipeline should be ready by March. The pipeline will be able the pumping of oil from the Caspian Sea to Europe. The final document is planned for June. It is possible that funds for the project will be made available before the end of this year. Representatives of UkrTransNafta, the Ukrainian company responsible for transporting oil outside of the Ukraine, and PERN Przyjazn, will resume negotiations in Kyiv next week, as the situation in Ukraine has finally calmed down after the elections. A part of the funding for the project is supposed to be obtained from the European Bank for Reconstruction and Development (EBRD). The entire investment's cost is estimated at around EUR 400 mln.

Polish newspaper "Rzeczpospolita", 14.02.2005

CASPIAN PIPELINE CONSORTIUM

• CPC capacity might be increased in March.

Kazakh Government might decide to increase the capacity of an oil pipeline managed by the Caspian Pipeline Consortium (CPC) up to 68 million tons per year as early as on March 1, Kazakh Energy and Mineral Resources Minister Vladimir Shkolnik announced. Kazakh Minister noted that the increase of the CPC oil pipeline capacity was necessary due to the expansion of the second stage of the Tengiz field. "The field will see the increase of oil production output up to 20-30 million tons, the surplus oil will have to be transported somewhere else and we do not have an alternative other than increasing the capacity of the CPC pipeline," Mr. Shkolnik stated. Mr. Shkolnik noted that "there are strict requirements on the part of the Russian Federation, which owns 24% of the CPC stock, in terms of the increase of CPC oil transportation costs." At the same time, "Kazakhstan is not particularly interested in doing it." "On the one hand, we own 19% of the CPC stock, but on the other hand we own 20% of Tengizchevroil (a company that conducts oil exploration at the Tengiz field). Therefore, we act simultaneously as consignors and transporters of goods," Mr. Shkolnik explained. Mr. Shkolnik noted that consensus was reached on this issue. The present capacity of the CPC pipeline is 28 million tons per year. Note: the CPC was founded in 1992 by the Governments of the Russian Federation, Kazakhstan and Oman. At present, 50% of the CPC capital belongs to foreign companies that are on the top ten list of global oil producers. The consortium was primarily formed to transport crude oil from the Tengiz oil field and neighboring oil fields in Kazakhstan and Russia to a newly constructed Novorossiisk-2 Marine Terminal on Russia's Black Sea coast.

Source: RIA Novosti 21.02.2005

OTHER ENERGY NEWS:

AZERBAIJAN

• Production Begins at Central Azeri in the Caspian Sea.

Unocal Corporation announced start-up of oil production from the Central Azeri development, part of the Azeri-Chirag-Gunashli (ACG) field, in the Azerbaijan sector of the Caspian Sea. The new platform, designed to process up to 420,000 barrels of oil per day, is the second of five production platforms scheduled to be commissioned through 2008 as a part of the full-scale development of the ACG field. Unocal holds a 10.3 percent ownership interest in the ACG Production Sharing Agreement (PSA). BP serves as operator with 34.1 percent; other parties to the PSA are SOCAR (10%), INPEX (10%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%t), Devon (5.6%), Itochu (3.9%) and Amerada Hess (2.7%). Located in approximately 420 feet of water 62 miles east of Baku, Central Azeri production began from the first of 10 pre-drilled production wells on February 12. The produced oil will initially fill the new pipelines to shore and newly expanded shore facilities during February. First export of oil is expected in March 2005. Production is expected to increase through 2005 as the other pre-drilled wells are brought online, prior to further platform drilling and production ramp up over the coming years.

Source: Unocal Corporation, http://www.unocal.com, 14.02.2005

GEORGIA

• Georgian gas pipeline not to be privatized yet.

Georgia and Gazprom have not started negotiations on the privatization of the Georgian gas pipeline yet, Georgian State Minister for Economic Reforms Kakha Bendukidze stated. "We are aware of Gazprom's interest in the Georgian gas pipeline. However, we are not negotiating with the Russian company on this issue," the Georgian Minister marked. According to him, Gazprom has not outlined its position on the privatization process yet. "If Georgia decides to sell the gas pipeline it will be interested in the highest price," Mr. Bendukidze added. The privatization of the gas pipeline was discussed in Georgia in summer 2003. At that time the US Government came out against the deal with Gazprom. US Envoy on Caspian Energy Steven Mann declared in Tbilisi that this deal would have called into question the efficiency of the Shakh Deniz project (Baku-Tbilisi-Erzurum). Mr.Mann reminded that Georgian leadership of its obligations not to make energy deals affecting the efficiency of the above-mentioned project. The Georgian gas pipeline with the capacity of 16 billion cubic meters is included in the list of strategic objects, which are not meant for privatization. If a decision to sell the pipeline is made, the Georgian Parliament will have to amend the law on privatization.

Source: RIA Novosti 22.02.2005

KAZAKHSTAN

• Kazakhstan, China to end preliminary gas talks before July.

The Governments of Kazakhstan and China plan to finalize preliminary negotiations on a Kazakhstan-China gas pipeline in the first half of this year. Then they will consider possible investments. Kazakhstan is drafting a feasibility study of the pipeline project. The sides are considering the delivery of Kazakh natural gas to West China. Kazakh gas resources and China's gas market have been evaluated, and technical aspects of the gas deliveries are under analysis at present. Kazakhstan plans to start the deliveries to China in 2008. At first the deliveries will make 8-10 bcm a year, and they will reach 30 bcm by the year 2020. Kazakhstan is an oil producer, but it also wants to enlarge the production of natural gas by more than five times to 50 bcm before 2015. The domestic demand for natural gas does not exceed 16 bcm. In 2003 Kazakhstan produced 13 bcm of gas. The gas pipeline will be the second project between China, whose economy is hungry for fuel, and Kazakhstan. The first project was an oil pipeline with the annual capacity of 20 million tons. The new pipeline will be connected to China's West-East pipeline network. In the future it may be extended to Uzbekistan and Turkmenistan, and connected to the pipeline systems of Russia and Iran, thus, making a Pan-Asian energy bridge. A 4,000-kilometer pipeline between the Xinjiang Uygur autonomous district and Shanghai will connect West China, which will receive Kazakhstan natural gas, to East China. The Kazakh-Chinese gas pipeline project is a step towards the establishment of an energy club of the Shanghai Cooperation Organization (SCO), which currently unites Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Source: http://www.tehrantimes.com/ 07.02.05

• India seeks stake in four oilfields in Kazakhstan.

India has sought stakes in four Kazakhstan oilfields, including the giant Kashagan and Kurmangazy oilfields, and offered to build Kazakh-China pipeline and petrochemical plants to boost trade and economic ties with Central Asia. ONGC Videsh, the foreign arm of Oil and Natural Gas Corporation (ONGC), wants a stake in Tengiz and Kashagan oilfields and hugely prospective Kurmangazy and Darkhan exploration blocks and offered its technical expertise in exploration and production (E&P). State-owned gas utility GAIL (India) Ltd wants to participate in building pipelines from Kazakhstan to China for transporting crude oil. The possible routes of the pipelines are Ishim-Astana-Karaganda-China, West-East pipeline (KC Makhat-China) or Bukhara-Almaty branch trunk pipeline (KC Shalkar-KC Shamianovka-China). Besides, New Delhi proposed to build gas processing and petrochemical plants at Atyrau and Aktau. "The North-South transport corridor project, from Aktau on the Caspian Sea through Iran to the Arabian Sea, should also be seen as an energy corridor, consisting of oil and gas pipelines that link up with the pipelines in South Asia and bring energy resources to India and then move on to the South-East Asia" ? the Minister marked.

Source: http://www.financialexpress.com/ 19.02.2005

• BG to sell half Kashagan oil-field stake to Kazakhs.

BG Group, the British energy company, is close to selling half of its stake in an oil field consortium in Kazakhstan. Vladimir Shkolnik, the Kazakh Energy Minister informed that the next round of talks over the Kashagan field in the Caspian Sea would begin very soon. "We are to complete the documents before late March." The country has been seeking to pay half of BG's 16.67 per cent stake in the Kashagan project, a deal that would be worth $615m (?330m) to the BG. The country has been seeking to buy all or part of BG's stake in the Kashagan project, but the approach has been resisted for months by most other consortium members, who wanted to buy BG's stake themselves. Kazakhstan first proposed to buy half BG's stake in January as a compromise but earlier this month it said it wanted to take the entire 16.67 per cent. Kashagan, discovered in 2000, is one of the biggest new oil finds of recent years. It is due to start pumping in 2008 and is estimated to have proven reserves of 1.5 billion tons. BG Group was unavailable for comments.

Source: http://news.independent.co.uk 22.02.2005

RUSSIA

• Lukoil aims at new oil province in Caspian Sea.

Lukoil wants to create a new oil province in the Caspian Sea, Lukoil President Vagit Alekperov stated. According to him, they are holding scientific, engineering and environmental researchs. Gas makes a large share of prospected and potential Caspian mineral resources, so it is possible to broaden the production of polymers and create a gas-chemical industry in the Caspian region, Mr. Alekperov marked. Lukoil is running about 300 gasoline stations, 39 oil storage places, two gas filling stations and the Astrakhan distribution and transshipment center with the annual capacity of 1 million tons of crude oil and 1 million tons of light petroleum products in the southern federal district. Lukoil tax deductions neared 10 billion rubles in South Russia last year. More than 100 million rubles were spent on sponsor and charity projects.

Source: http://www.tehrantimes.com/ 03.02.2005

• Gazprom plans gas shipments to South Korea.

Gazprom Deputy Chairman of the Board Alexander Ananenkov and Ko Jan Jik, Director of the Energy Board at the Industry, Trade and Energy Ministry of South Korea, have looked into arranging Gazprom's natural gas shipments to South Korea from the united gas-supply system, taking shape in eastern Russia. They also discussed a broader interaction between the Russian gas concern and the Korean gas corporation Kogas, preparation of the Russian-Korean intergovernmental agreement on cooperation in the gas sphere. "South Korea's demand for Russian natural gas is accounted for in drawing up the programme of unfolding in East Siberia and the Far Eastern region a united system for the production, transportation and supply of gas. Its top-priority projects are the development of the Sakhalin offshore fields and shaping a system of gas transportation", Mr. Ananenkov noted. Gas is scarce in South Korea and its gas market actually in full depends on the import of liquefied natural gas.

Source: RIA Novosti 03.02.2005

• Transneft borrow a $200 mln to lay Baltic oil mainline.

The Russian-based Transneft petroleum transport major is making a $200 million syndicated loan for three years to lay a third stage of the Baltic pipeline net. The money will go to fund BTS third stage laying and re-finance a part of corporate indebtedness. The three-year loan is to be paid in three equal installments after a two-year preferential term expires. The Transneft is the world's largest petroleum piping company. It transports 94 per cent of Russian-extracted oil, with a pipeline network of 48,228 kilometers. The Federal Government accepted, toward last December's end, a proposal by the Industry and Energy Ministry and the Transneft to extend the BTS throughput to an annual 60 million tons. The Russian Government also deemed it expedient for the company to fund BTS third stage laying with borrowed money. The Cabinet determined to lay a united Baltic Pipeline Net, October 16, 1997. The chief BTS mission is to pipe petroleum to Northern Europe from oilfields of the Timan-Pechora oil-and-gas-bearing province, West Siberia, the Urals and the Volga country via a new terminal in the Gulf of Finland. The BTS may eventually serve to export oil from other CIS countries, mainly Kazakhstan. BTS blueprints envisage two mainlines laid-one from Kharyaga, township in the Nentsi autonomous area, Arkhangelsk Region, to Usinsk, town in the Komi Republic, European Russia's north. The other line is to stretch from Kirishi in the Leningrad Region to the Primorsk tanker terminal on the northeast coast of the Gulf of Finland, 150 kilometers off St. Petersburg. The project also envisages updating certain stretches of three available mainlines-Usinsk-Ukhta, Ukhta-Yaroslavl, and Yaroslavl-Kirishi. Their total length is currently 1,885 km, to be prolonged by another 833 km. The Baltic mainline net will thus be 2,718 km long.

The project is estimated at two billion US dollars.

Source: RIA Novosti, 28.02.2005

• "Gasprom", "Gazexport" и "Gasum" agreed on Russian gas supplies to Finland till the year 2026.

Member of the Board, General Director of Gazexport and Chairman of the Board of Gazum signed in Moscow the Agreement on prolongation of the validity term for the main export contract on Russian natural gas supplies to Finland till 31 of December 2005. The Document also envisages a significant increase of gas volumes supplies to Finland (for more than 15%) with output nearly 6 bln cub m to the year 2008. The Agreement was signed within the framework of realization of Memorandum on cooperation between Gazprom and Gazum, which was signed in September 2004.

Source: RusEnergy 08.02.2005

• India ready to invest $25 bln in Russian oil.

India is ready to pay an incredible price for the right to produce oil and gas in Russia. According to the Russian Government, the Indian oil and gas Ministry sent a letter to Russian Prime Minister Mikhail Fradkov proposing $25 billion in investment in Russia. After arriving in Moscow, Aiyar Mani Shankar, India's Minister of petroleum and natural gas, confirmed that his country was ready to invest billions of dollars in Russia. The Minister specified the projects that interested him the most, one of which was a share in Yuganskneftegaz, the former Yukos subsidiary that state-run Rosneft bought in December. Indian companies would also like to work as part of the Sakhalin-3, which Russia could hold a tender for this year, and are interested in Rosneft's assets, the Vankorskoye oilfield and Severnaya Neft project. The Minister also marked that Indians would welcome investors from Russia. Note: India imports about 70% of its oil. ONGC is state-owned and accounts for 77% of oil and 81% of gas production in the country. In the 2003-2004 financial year (closed March 31, 2004), ONGC produced 27 million tons of oil and recorded revenues of $7.3 billion, with a net profit of $1.9 billion.

Source: RIA Novosti 22.02.2005

TURKMENISTAN

• Work on pipeline to begin this year.

Pakistan would soon issue tenders to begin work on one of the three trans-national pipelines for natural gas import in 2005 to meet its growing energy requirements and to achieve a higher economic growth. "A decision (to select one of the three pipelines) would be taken shortly and tenders would be issued and work would be started within 2005," - Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon stated. The decision would soon be taken which of the three pipelines - from Iran, Turkmenistan or Qatar - should be constructed first. Pakistan might have to construct another pipeline in later years. The Minister also informed that the Government was preparing a 10-year plan to meet future energy requirements as the country would start facing gas shortages from 2010. It is also planned to increase the number of drilling of oil and gas wells to 75 per year.

Source: RIA Novosti, 09.02.2005

• Gas war erupts between Turkmenistan and Russia.

Turkmenistan stopped pumping gas to Russia two months ago because the two countries remain divided on specific gas prices. Gazprom CEO Alexei Miller held the meeting with Turkmen President Saparmurat Niyazov, but failed to negotiate a gas-price deal. In December 2004, Ashkhabad decided to charge $60 (instead of $44) for every 1,000 cubic meters of natural gas being earmarked for Russia beginning in early 2005. However, Turkmenistan cut off all gas flows in the New Year's early hours. Meanwhile, Kiev lost its nerve, agreeing to pay $58 for every 1,000 cubic meters of Turkmen gas starting January 3. Ukraine will therefore suffer $500 million annual losses. Mr. Miller has visited Ashkhabad for the second time in the last two weeks declared after the visit that the Russian-Turkmen contract remained in force, and that Moscow will continue to follow its provisions. However, this contract is nothing but a scrap of paper. Meanwhile, Russian gas demand is expected to dwindle considerably this spring, with Gazprom already pumping some gas into underground reservoirs. Gazprom planned to buy about 16-17 bcm of Turkmen gas within the next two years. The Russian concern cannot reduce its long-term, gas-export volumes for many consecutive years. But Turkmenistan is in no position to sell these impressive gas volumes anywhere else. Ashkhabad may suffer annual losses to the tune of $3-4 billion, if Russia refuses to buy Turkmen gas.

Source: RIA Novosti, 21.02.2005

UKRAINE

• Naftogaz of Ukraine to drill oil in Emirate.

Naftogaz of Ukraine reached an agreement with the Government of Fujairah (United Arab Emirates) on prospecting and extraction of oil and gas on the territory of the emirate. Aleksandr Kyseliov, Naftogaz of Ukraine?s Deputy Chairman of the Board - Director for external markets, stated at a press conference. The deal was signed between Naftohaz of Ukraine, the Government of Fujairah and JV Naftohaz Middle East on January 26, 2005. Naftogaz of Ukraine will perform operations Fujairah in four blocks: two on land (gas deposits constitute 190 bn cubic meters, gas condensate 87.4 mn cubic meters) and two on the shelf (1.7 bn ton oil deposits). Naftogaz of Ukraine plans to drill two prospecting and four exploratory holes. The cost of prospecting operations will run into US $ 38.6 mn, according to the company's estimates. Total capital outlays of Naftogaz of Ukraine for prospecting and development of the deposit in Fujairah will constitute US $ 191.8 mn. National JSC Naftogaz of Ukraine and Al Jazirah Enterprise for Project Development & Trading (UAE) created a JV named Naftogaz Middle East last July to work in the region.

Source: Business Morning Ukraine, Press Centre of Naftogaz of Ukraine, 10.02 2005

• Deutsche Bank mulls US $ 2 bln credit line for Naftogaz of Ukraine.

Deutsche Bank about to open a credit line of about US $ 2 bnl to Naftogaz of Ukraine to implement the company's international projects, Deputy Chairman of the Board Aleksandr Kyseliov stated. The relevant memorandum was signed the other days. The credit would be obtained for the period of implementing the most important international projects until they became self-financing. The period of the credit could be up to 10 years, Mr. Kyseliov marked. The next round of talks with Deutsche Bank would take place tomorrow, after which a credit agreement will possibly be signed. Naftogaz of Ukraine also intends to obtain a US $ 150 mn loan from ABN Amro this month.

Source: Business Morning Ukraine, Press Centre of Naftogaz of Ukraine, 10.02.2005

• Ukraine in negotiations develop Iraq's Kormor gas field.

Ukrainian national oil and gas company Naftogaz of Ukraine entered the next stage in negotiations with Iraq on taking part in a tender to carry out engineering work and supply equipment and materials, and also develop the Kormor gas field in Iraq. The preliminary cost of the project amounts to $150 million and proposed gas production amounts to 2.7 billion cubic meters per year. The field is located 80 km north of Kirkuk, in Iraqi Kurdistan. Naftogaz of Ukraine is also considering taking part in tenders to carry out engineering work and supply equipment and materials to the Koia refinery in Iraq. The Ukrainian company has held talks with management from state bodies and leading U.S. companies to receive direct contracts and subcontracts for work to restore Iraq, being financed by the U.S. Government, and has received support from the U.S. side. The company has also prepared the agreement between the Iraqi and Ukrainian Governments on oil and gas cooperation, and has submitted this to the Ukrainian Foreign Ministry, to have it approved by the Iraqi side.

Source: Interfax Information Services, http://www.rigzone.com, Press Centre of Naftogaz of Ukraine, 11.02.2005

• Ukrainian Company eyes buying 50 Percent of Russian Kalmoil Co.

Before the production of oil begins from fields in Kalmykia (Russia's autonomy in the western Caspian region), Naftogaz of Ukraine plans buying, 50 percent of the Russian oil company Kalmoil for 10.9 million dollars. The Kalmykia project intends the participation of Ukraine's Naftogaz in developing five land blocks (promising Caspian shelf zones) and 17 operating fields owned by OAO Kalmneft and ZAO Kalmpetrol, as well as in auction tenders for the fields Titova and Trebsa in the Nenets Autonomous District (Barents sea coast, north of European Russia). "As the first step in the project, the Company's Board decided to buy 50 percent shares of ZAO Kalmoil", the communique reads. In the course of talks, the cost of the 50-percent block of shares reduced from 32.5 to 10.9 million dollars. The total reserves of oil in the Kalmoil license zones constitute 135.3 million tonnes. The total of capital investments in geological survey and the development of the infrastructure is expected to reach 162.7 million dollars. Upon expiry of the seven-year term - when investments are recouped - profits from the project will be divided 80/20 between the Ukrainian and Russian parties; upon full return of investments it will be 50/50. The Ukrainian company plans to begin the production and sale of oil in 2006. By 2008 the level of oil production is expected to reach 362,000 tonnes.

Source: RIA Novosti, 08.02.2005

• Naftogaz of Ukraine to open representation office in Iran.

NJSC Naftogaz of Ukraine will open a representative office in Iran, the company's Deputy Chairman Aleksandr Kyseliov announced. Opening of the represenataion office will enable company's participation in numerous projects, including construction of the 2,000-kilometer Assaluya-Chabahar gas pipeline, which will possibly be extended to Pakistan and India; diagnostic work on the 140-kilometer oil pipeline from Omide to Genave with the aim of determining whether it is fit for further operation; construction of an extension of a gas network to the provinces of Sistan and Balochistan; exploration, development, and mining of crude oil and gas; construction and reconstruction of petroleum refineries, underground storage facilities, oil pipelines, and product pipelines.

Source: Business Morning Ukraine, 11.02.2005

• Naftogaz of Ukraine wants to participate in Algeria ?Spain gas pipeline.

NJSC Naftogaz of Ukraine wants to participate in the construction of gas pipeline with length of 311 kilometers for transportation of gas from Algeria to Spain. Last autumn, Naftogaz of Ukraine decided to bid in the tender. Construction of gas pipeline is a joint venture of Algerian Sonatrak, Gaz de France, TotalFinaElf, BP, Endesa, and ENI. The project envisages construction of gas pipeline that should provide deliveries of Algerian gas to Europe (via Spain) and connect Algerian deposit with French gas network. The cost of the project is estimated at US $ 310 mn. Naftogaz of Ukraine also looks to bid in the international tender, planned to start in March, for finding, prospecting and development of oil and gas deposits in Algeria.

Source: Press Centre of Naftogaz of Ukraine, 11.02.2005

• "Ukrtransgas" will invest up to 4 bln Hryvna into modernization of gas transportation system.

State Company "Ukrtransgas", which provided transit of Russian gas to the countries of Eastern Europe and European Union, intends to invest up to 4 bln Hryvna into modernization of gas transmission system in 2005. According to the Director General of Ukrtransgas Anatoliy Rudnik, this sum is approximately equal to the one that the Company invests each year. At the same time, the investment demand for modernization of GTS is nearly $1,2 bln. The Company expects to increase investments with the beginning of the work of gas transportation consortium with participation of Ukrainian, Russian and European parties. The Company plans to increase gas transit volumes to the countries of Eastern Europe compared to 3.7% or 4.5 bcm with year 2004 that will totally amount to 124.9 bcm in the year 2005.

Source: ukroil.com, RusEnergy 09.02.2005

• Gas consortium out to build Novopskov- Uzzhhorod pipeline.

The International Consortium for Management and Development of the Ukrainian Gas Transport System plans to begin construction of the Novopskov-Uzhhorod gas pipeline in the first half of the year. "To ensure an increase in the volumes of transit of natural gas to European countries and a stable effective and safe functioning and development of Ukraine's gas transport system, construction of the Novopskov-Uzhhorod gas pipeline will begin in the first half of 2005," ? was marked in a statement. The length of the 1,420 mm pipeline should comprise over 234 km. It will have annual capacity 20-30 bcm. It is planned that the last and third line of the Novopskov-Uzhhorod gas pipeline will become operational in 2009. VNIPITRANSHAZ, an engineering and production enterprise, is the general designer of the pipeline.

Source: Ukrainian News, 24.02.2005

UZBEKISTAN

• Gazprom signs contract to import Uzbek gas.

Gazprom and Uztransgas companies have signed a contract package to pipe Central Asian natural gas via Uzbekistan and import Uzbek gas to Russia. This year's contract supplies will make 5 bcm. Uzbek natural gas deposits are estimated to exceed 6.25 trillion cub m. Annual average extraction amounts to 55 bcm. Uzbekistan exports five billion of this to the neighboring Kazakhstan, Kyrgyzstan and Tajikistan. Exports to Russia started in May 2003 to make 1.27 bcm within the year, and closely approach a seven billion mark the next. Guiding partnership with Uzbekistan for its gas-piping progress is the Central Asia-Center, an ambitious transnational project on which available mainlines are extended and updated, and new ones laid in Turkmenistan, Uzbekistan, Kazakhstan and Russia for Central Asian gas transportation on a scale envisaged by international understandings.

Source: RIA Novosti. 05.02.2005

Uzbekistan revokes British oil company's license.

Uzbekneftegaz national holding company has revoked the license of British UzPEK Ltd to prospect and extract in Uzbekistan, Head of the Uzbek Company's Sobir Salimov announced. British company violated terms of the 2001 agreement, which gave the company the right to prospect and develop oil and gas fields and build infrastructure on licensed territories in Central Ustyurt (north-western Uzbekistan) and Southwestern Hisor (in the south of Uzbekistan). Uzbekistan's current programme comprises a number of oil and gas projects for 2005, including the project with China's CNPC for geological survey and oil and gas development, and the project with Iran's NPC for construction of a liquefied gas plant. Last year Russia's LUKoil started to develop Hauzak and Shodi gas fields of the Qandim group. LUKoil investment commitments total 995.21m dollars. At the same time, Russian Gazprom's subsidiary Zarubezhneftegaz is prospecting the Shohpaxhti gas field. Totally, Gazprom plans to invest about 1.2bn dollars in the Uzbek oil and gas industry. Foreign capital in Uzbekistan's oil and gas industry totals to 1.8bn dollars.

Source: ITAR-TASS news agency, Moscow, BBC Monitoring, http://quotes.freerealtime.com 22.02.2005