Page 7 - FSUOGM Week 44

FSUOGM COMMENTARY FSUOGM

Uzbek President
Shavkat Mirziyoyev
visits the Fergana oil
refinery in May 2019.

UOP is supplying technologies. states Kyrgyzstan and Tajikistan, Uzbekistan also
A catalyst for a gas oil hydrotreater was has logistical problems importing oil.
replaced at the site last year, bringing 20% of
the refinery’s diesel production to Euro-4 and Alternative fuel sources
Euro-5 standards. Further upgrades, due to con- A source of hope for Uzbekistan is a new gas-
tinue until 2025, will further improve fuel quality to-liquids (GTL) plant due to start production
and boost the share of light fuel production in in early 2021. The country’s energy ministry
overall output. recently reported that construction had reached
Uzbekistan previously wanted to build a 91% completion, after the return of workers after
brand new refinery in the eastern Jizzakh region, coronavirus (COVID-19) disruptions.
before axing this plan in favour of revamping The $3.6bn project will produce some 1.5mn
its existing facilities instead. The 100,000 bpd tpy of kerosene, diesel, naphtha and LPG, using
Jizzakh refinery was expected to cost $2.2bn, 3.6bn cubic metres per year of gas as its feed-
financed by Russian interests. It would have stock. The diesel will chiefly be used in agricul-
produced some 3.7mn tonnes per year of motor ture, transport and mining, while the kerosene
fuels, 700,000 tpy of kerosene and 300,000 tpy of will fuel planes. LPG will be sold as vehicle fuel
other products. and naphtha used as feedstock at a new petro-
chemicals cracker being built at the nearby Shur-
Logistical concerns tan gas-processing hub.
Uzbekistan, which with 33mn people is Cen- Uzbekistan’s gas reserves are far more sizea-
tral Asia’s most populous country, produced ble than its oil reserves – estimated by BP at 1.2
only 2mn tonnes of diesel and gasoline last year, trillion cubic metres proven. But its choice for
according to state data. It covers the rest of its export markets is poor. Russia only buys Central
needs with oil product imports and locally pro- Asian gas when it is competitive against its low-
duced compressed natural gas (CNG). cost domestic supplies, whereas China has many
By building up its refining industry, Uzbek- import options, enabling it to drive down prices.
istan hopes to reduce its import bill and free As such, it makes sense for Uzbekistan to
up gas for other uses. It also wants to make make use of as much gas as it can domestically.
semi-regular fuel shortages, mostly caused by The government has even said it expects gas
import disruptions, a thing of the past. Boosting exports to fall to zero by 2025, thanks to the
domestic jet fuel supply will be key to Uzbekistan launch of new gas-based projects at home.
realising its plan of becoming a hub for air travel Depending on Uzbekistan’s success in
between Asia and Europe. increasing domestic gas supply, it may be able
Beyond the poor state of its refineries, to expand the use of gas as a vehicle fuel, which
though, another reason for Uzbekistan’s low fuel is often cheaper and cleaner than gasoline and
production has been difficulties with procuring diesel. But it will also have to address the prob-
the necessary crude oil. Domestic oil production lems with its gas transport network. The coun-
has been declining for years, despite ambitious try has some 13,000 km of trunk gas pipelines,
growth targets set by the government. many of which were built more than 50 years
Authorities want to reverse the situation by ago. The network’s poor state results in technical
attracting more foreign investors, especially at losses of up to 25% of supply. State grid opera-
mature or hard-to-recover oil projects. But the tor Uztransgaz is working with consultants on
current weak market conditions make the search a plan to overhaul the system, but progress is
difficult. Like fellow landlocked Central Asian slow. ™

Week 44 04•November•2020 www. NEWSBASE .com P7