BP Exploration and SOCAR Decide to Look for Hydrocarbons in Aral Sea

The document provides for geological exploration in the Uzbek part of the Aral Sea, Sam-Kosbulak and Baiterek investment blocks of the Ustyurt region.

Earlier, representatives of BP and SOCAR in an interview with ASTNA preferred to joke about the possibilities of extracting hydrocarbons in Uzbekistan, and the signing of a geological exploration agreement on May 16 does not mean that commercially attractive reserves will be found on the investment blocks proposed by the Uzbek side.

Previously conducted research by various oil companies in Uzbekistan showed there is a lot of gas in the country, but quite a bit of oil. Oil production in Uzbekistan in 2018 compared with 2017 decreased by 8.2% to 746.4 thousand tons, and natural gas production increased by 6.1% to 59.842 billion cubic meters (bcm).

It was expected that gas production in Uzbekistan in 2018 will amount to 61-66 bcm due to the intensification of geological exploration, as well as the development of new fields, including with the participation of foreign companies.

The capacity of JSC Uzbekneftegaz (which includes more than 200 companies, 20 joint ventures, 6 joint-stock companies and a number of other organizations) allows for the production of natural gas in the amount of about 70 bcm per year and liquid hydrocarbons in the amount of 8 million tons per year, however due to the depletion of reserves and technological losses, the production of hydrocarbons in Uzbekistan over the past 15 years has fallen significantly, and without new fields in the next 10-15 years it may be halved.

LEARNED AREAS

Recall that Uzbekneftegaz, BP and SOCAR last May signed two memorandums aimed at joint exploration work on investment blocks of Uzbekistan, as well as the development of deposits. Besides, Uzbekneftegaz previously entered into an agreement on strategic partnership with the Azerbaijani company. It provides for the training of Uzbek specialists in SOCAR, as well as the participation of Uzbekneftegaz in projects on the shelf in Azerbaijan.

Uzbekneftegaz is confident that attracting Azerbaijani and British companies will allow the use of advanced foreign technologies and methods to increase the efficiency of the search and production of hydrocarbons, as well as contribute to the discovery of new fields and the training of domestic specialists.

Note that the Ustyurt Plateau is located on the territory of 2 countries: Kazakhstan - the western part and Uzbekistan - the eastern part.

A geological study of the Uzbek part of Ustyurt for oil and gas using seismic and deep drilling was started in the late 1950s (during Soviet times), and 7 gas condensate fields were discovered. According to optimistic forecasts of Uzbek geologists, the projected hydrocarbon resources (recoverable) from Ustyurt amount to 970 million tons of oil equivalent, and according to pessimistic ones - 120 bcm of gas and about 7 million tons of condensate.

The Russian Gazprom conducted work on such investment blocks of the Aral as Shahpakhti Agy, Akchalak, Urga (western part), Kuanysh, Aktumsuk and Nasambek, but did not study the zones of the Sam and Kosbulak troughs and the northern part of the Aktumsuk system of uplifts in the north of Uzbekistan and the Central Ustyurt uplift in the middle part.

It was recognized that the north of Aktumsuk system and the Central Ustyurt uplift are not of significant interest for the search for hydrocarbon deposits.

The government of Uzbekistan places great hopes on Ustyurt in terms of hydrocarbon growth. However, according to independent experts, Gazprom already has all the most profitable places in Uzbekistan.

The blocks that went to BP and SOCAR - Sam-Kosbulak and Baiterek - are complex from a geological point of view and very little studied. It is possible that the decision to conduct geological exploration on them is worth more politics than economics.

Uzbekistan is the largest Turkic-speaking country in the CIS and is developing relations with other similar countries. Azerbaijan, which initiated the creation of the Baku-Tbilisi-Kars railway, attracts cargo from Uzbekistan for this direction.

Azerbaijan is currently interested in the experience of Uzbekistan in the development of sericulture, cotton growing, carpet weaving, and electrical engineering production. And although in 2018 the growth of commodity turnover between Uzbekistan and Azerbaijan was 50%, in monetary terms it was only $ 44 million. The leaders of both countries talked about the potential level at half a billion or even a billion dollars, but this is a distant prospect.

More than 80 enterprises with the participation of Azerbaijani investments, including over 70 joint ventures, operate in Uzbekistan. They operate in such areas as trade, engineering, metalworking, finance, energy, services, food and light industry.

Representative offices of Uzbekistan Airways, Uzavtoprom, the leading manufacturer of a wide range of passenger cars under the Ravon brand, and Artel, specializing in the manufacture of high-quality and competitive electrical products, operate in Azerbaijan.

The issue of opening the Trade House of Uzbekistan in Azerbaijan is being discussed.

Uzbekistan calls Azerbaijan into projects to create 17 free economic zones, as well as 47 industrial zones.

There are prospects in the fields of agriculture, construction, ICT, and food.

As for energy resources, Uzbekistan, as a major gas producer, could be of interest if the Trans-Caspian gas pipeline is laid through the Caspian Sea, but this project lobbied by the EU does not find real support from global oil companies that consider it unprofitable.