CAPITAL: Tashkent

MONETARY UNIT: Sum

REFINING CAPACITY: 222,271 b/cd

OIL PRODUCTION: 163,000 b/d

OIL RESERVES: 594 million bbl

GAS RESERVES: 66.2 tcf

Uzbekistan in 1998 accelerated efforts to attract foreign oil and gas investment. The heavily populated central Asian republic also advanced a strong program of refinery modernization without direct foreign equity participation.

The government preferred loan-financed projects under which foreign companies performed services on a contractual basis.

It hoped to have sufficient capacity in place to allow net exports of refined products after the turn of the century.

In addition to its refinery modernization program, Uzbekistan planned to increase production of crude oil and natural gas by about 25% by 2000. Much of the added production was earmarked for domestic consumption. The original scheme called for much of the upstream investment to come from domestic sources and foreign loans, but the government later offered upstream opportunities to foreign companies.

Uzbekistan state firm Uzbekneftegaz in midsummer 1998 offered six oil and gas exploration and development license areas near the Aral Sea to foreign firms.

Largely self-sufficient in energy, Uzbekistan contains large natural gas reserves and production, along with some oil and condensate production, and a growing downstream sector.

Output of natural gas during January-May 1998 rose to 23.94 billion cu m (bcm) from 21.92 bcm in the same period the previous year, reported Uzbekneftegas. In the same period output increases were also logged for crude and condensate, to 3.53 million metric tons from 3.3 million tons; gasoline, to 588,200 tons from 552,300 tons; and diesel, to 838,000 tons from 824,100 tons. Fuel oil production in the first 5 months fell to 803,300 tons from 857,300 tons in 1997.

The International Energy Agency (IEA), in a study on the Caspian Sea region`s oil and gas supply potential, said that the official government goal of 12 million metric tons/year of oil production by 2010 and 14 million tons/year by 2020 appeared feasible, as did the goal of 63 bcm of gas production by 2010. For a low case scenario, IEA trimmed those forecasts by 10% each for 2010 and 2020, "reflecting technical and other delays rather than demand constraints for the small amounts available for export."

The biggest constraint was export capacity. IEA reckoned that Uzbek oil exports would total 2 million tons, in the high case scenario, in both 2010 and 2020.

"Gas exports," the agency noted, "would be the small difference between domestic production and consumption and could vary strongly over time, depending more on economic growth rates than on gas production.

"In the high case, (gas exports) are expected to drop to zero and to become negative by 2020. In the low case, 5 bcm would be exported in 2010 and 6 bcm in 2020."

IEA predicted that Uzbekistan`s energy sector would grow by 1.8-2%/year during 2000-20, while the economy grew 3-4.5%/year.

"These scenarios assume a considerable reduction of energy intensity in the economy. Uzbekistan has liberalized its energy prices more thoroughly than Turkmenistan has, although not as much as Azerbaijan or Kazakhstan," IEA said.