CAPITAL: Tashkent

MONETARY UNIT: Soum

REFINING CAPACITY: 222,271 b/cd

OIL PRODUCTION: 168,000 b/d

OIL RESERVES: 594 million bbl

GAS RESERVES: 66.2 tcf

Soon after declaring independence, Uzbekistan established economic policies that differed from more market-oriented approaches taken by several other former Soviet Union republics.

State subsidies, price controls, and gradual wage increases were used to shield consumers from inflation.

However, mounting economic problems by 1994 resulted in an economic reform program including stricter fiscal policies, removing price controls, cooperating with international financial institutions, introducing the Soum as the national currency, privatizing state assets, and liberalizing prices.

The fiscal restraint shown by Uzbekistan attracted considerable support from the International Monetary Fund, the World Bank, and other lenders such as the European Bank for Reconstruction and Development. In 1996, real economic output growth exceeded 1% (after declining by 60% during 1991-95). Inflation in 1996 was estimated at 64% after years of hyperinflation.

Upstream developments

Uzbekistan was the only former Soviet republic to have substantially increased its oil and gas production since becoming independent, with total oil production increasing from 66,000 b/d in 1992 to an estimated 168,000 b/d in 1999. The total includes natural gas liquids.

As a result, Uzbekistan ceased to be a net importer of petroleum in 1995.

Natural gas production increased from 1.5 tcf in 1992 to an estimated 1.7 tcf in 1997, making Uzbekistan the eighth largest gas producer in the world.

Most of the country`s 85 known oil deposits are small. The major exception is Kokdumalak field in the Bukharo-Khivi region, which accounts for about 70% of Uzbekistan`s output. Several regions were targeted for exploration during 1999-2000, including the Aral Sea.

Processing activity

During spring 1999, Uzbekneftigas let contract to Mouchel Group Ltd., West Byfleet, UK, to revamp its 106,000 b/d Fergana refinery.

The European Bank for Reconstruction & Development and Export-Import Bank of Japan agreed to fund the $180 million, 18-month project. Uzbekneftigas was to build a desulfurization unit, revamp the coker, cut volatile hydrocarbon emissions by improving rail-loading facilities, replace various pipelines, refurbish leaking pumps, dispose of stockpiled sludge, and remediate polluted groundwater. The plant, parts of which are more than 40 years old, processes local high-sulfur crude oil.