Lukoil Overseas (100% subsidiary of Lukoil) has completed a deal with Soyuzneftegaz to acquire 100% of SNG Holdings Ltd. group that includes Soyuzneftegaz Vostok Limited, which is a party (investor) to the PSA for the fields of South-West Gissar and the Ustyurt region in the Republic of Uzbekistan.
The amount of the deal made up around USD 580 million, a press release of Lukoil said. The second party to the PSA is Uzbekneftegaz National Holding Company acting as an authorized state body. PSA was signed on 23 January 2007 for 36 years and came into effect on 23 April 2007.
Seven fields – Jarkuduk-Yangi Kyzylcha, Gumbulak, Amanata, Pachkamar and Adamtash gas condensate fields, South Kyzylbayrak oil and gas condensate field and the Koshkuduk oil field are located on the contract area of the South-West Gissar (Kashkadariya Region). Moderate volumes of oil and gas condensate are produced at South Kyzylbayrak and Koshkuduk.
The reserves in place for this group of fields of C1 category approved by the State Reserve Committee of Uzbekistan make up around 100 bcm of gas and about 6 million tonnes of liquid hydrocarbons (oil and gas condensate). Thus, the cost of acquisition of C1 reserves amounted to slightly more than USD 0.9/boe. The forecast production on the contract area is around 3 bcm of gas and over 300,000 tonnes of liquid hydrocarbons per annum. The plan is to achieve this level in 4 years.
The contract area is operated by SNG Gissar Operating (a legal entity of the Republic of Uzbekistan), which makes part of the assets to be acquired. Estimated investments for project implementation are about USD 700 million. At present over USD 70 million has been invested into the project.
It is planned to process the feedstock from the South-West Gissar at the Shurtan gas and chemical complex, which will send dry gas for export via the main networks of Gazprom – Central Asia-Center and Bukhara-Ural gas pipelines. The oil to be produced will be delivered to the Bukhara and Ferghana refineries via the terminal in Shurtan. The feedstock and oil and gas products (petrol, diesel fuel, machinery oils, fuel oil, liquefied gas, kerosene, etc.) are marketed by SNG Vostok Marketing Limited to the benefit of all participants in the PSA.
According to the PSA the license for exploration, including prospect evaluation surveys at the Karaumbet and Shumanai investment blocks of the Central Ustyurt (Karakalpakstan) and additional exploration of the contract area at the South-West Gissar is issued for 5 years. The minimum volume of investments in the exploration will make up around USD 22 million.
