Page 9 - FSUOGM Week 32

FSUOGM COMMENTARY FSUOGM

The construction site
of the GTL plant in
February. Source:
Uzbekistan's energy
ministry.

Uzbekistan is not the only Central Asian state Uzbekistan plans to revamp them over the com-
intending to convert gas into synthetic fuels. ing years.
Turkmenistan launched the region’s first GTL Uzbekistan’s reliance on fuel imports has led
plant last year. But the Oltin Yo’l GTL complex to intermittent shortages over the years – a key
will be twice the size, capable of processing up drag on its economy.
to 3.6 bcm per year of gas into 1.5mn tonnes per Kerosene from the plant will be used in
year (tpy) of kerosene, diesel, naphtha and LPG. Uzbekistan’s airline industry. The country wants
The project was conceived over a decade ago, to position itself as a key hub for international
with UNG entering into a heads of agreement air travel between Asia and Europe, and having
(HoA) on the venture with South African GTL a cheap and reliable supply of jet fuel will be vital
specialist Sasol and Malaysia’s Petronas in 2008. for achieving this goal.
They agreed to form an equal-shares consortium Naphtha, on the other hand, will be delivered
for the project the following year. to the nearby Shurtan gas processing complex,
It took until 2013 for the search for financing where a new naphtha cracker is under construc-
to begin in earnest, with Uzbekistan primarily tion that will produce ethylene and polyethylene.
targeting export credit agencies (ECAs) in Asia These commodities will be used in Uzbekistan’s
and Europe. But progress was derailed by the textile manufacturing.
2014 oil price crash, and two years later Sasol
quit the project, while staying on as a technology What next?
licensor. Petronas also left. Uzbekistan’s Energy Ministry back in May reit-
Despite these setbacks, UNG finally made a erated that all construction, installation and
breakthrough with financing in December 2018, pre-commissioning work at the plant would be
securing more than $2.3bn in funding from China completed by the end of this year. Production is
Development Bank, South Korean ECAs Kexim slated to commence in early 2021.
and K-Sure, and Russian financiers Gazprombank However, there is a risk that this schedule
and Roseximbank, along with other lenders. could be revised, due to coronavirus-related
disruptions and other delays. While the contin-
Product uses uing economic fallout from the pandemic could
Diesel from the GTL complex will be used in weigh down on fuel demand in Uzbekistan, the
Uzbekistan’s agricultural and transport sectors, plant’s long-term supply contracts with custom-
as well as mining industries. The country cur- ers will provide a cushion.
rently gets most of its diesel and other light fuels If all goes to plan, the project will provide
from abroad. Its own conventional oil refineries a considerable boost to Uzbekistan’s econ-
operate at only a fraction of their capacity, amid omy, helping the government move towards
declining domestic oil production and difficul- its growth goals and continue with reforms. It
ties bringing crude into the double-landlocked could also encourage investment in additional
country on a commercially feasible basis. They GTL capacity in Central Asia, helping the region
are also in need of modernisation, although capitalise on its gas wealth. ™

Week 32 12•August•2020 www. NEWSBASE .com P9