South Korea, Uzbekistan Sign Pact to Develop Gas Field

Text of report in English by South Korean news agency Yonhap

Seoul, 25 February (Yonhap) – A South Korean energy consortium on Monday [25 February] signed an accord with Uzbekistan’s state-owned Uzbeknefgaz to jointly develop a gas field in the central Asian country.

The 50-50 deal, reached in Seoul by state-run Korea Gas Corp. (KOGAS) and its Uzbek counterpart, calls for the two sides to set up a joint firm to develop the Surgil gas block in western Uzbekistan near the Aral Sea. The preliminary agreement also calls for the construction of a gas-chemical industrial complex.

The Surgil well is estimated to hold more than 4.0 trillion cubic feet of natural gas. This is equivalent to 3.7 years worth of gas used by South Korea. Talks on joint development began in March 2006, but discussions have moved slowly over the last two years.

KOGAS, the world’s largest importer of natural gas, said total investment is estimated at 1.8bn US dollars, with the company holding 17.5 per cent state in the joint company. Lotte Daesan Petrochemical Corp. is to hold another 17.5 per cent, with LG Corp. STX Energy Co. and SK Gas Co. each holding 5 per cent.

KOGAS said once the gas-chemical industrial complex comes on line in 2012, the facility could process 2.8 billion cubic feet of gas per year and turn out 360,000 tonnes of high-density polyethylene and 80,000 tonnes of polypropylene that can be sold in Uzbekistan or exported to Europe and China.

“The deal is the first time that South Korea secured development rights to a energy resources in Central Asia by linking this to industrial infrastructure building,” a KOGAS official said. He added that the deal along with similar arrangements with Myanmar [Burma] and East Timor will give the company a regional springboard to engage in more development projects.

The agreement reached during the visit by Uzbek President Islam Karimov to South Korea for President Lee Myung-bak’s inauguration is a development of the 2005 strategic partnership pact between Seoul and Tashkent.

Besides the KOGAS pact, South Korea’s Daewoo, International Corp, said it sealed a agreement with Uzbeknefgaz to conduct geological surveys on two fields in the Ustyurt region in northwestern Uzbekistan. The company said it plans to conduct surveys on the Koskudyk and Ashibulak fields for the next five years. The region may possess large reserves of oil and gas and is being surveyed by such companies as Russia’s Gazprom and the China National Offshore Oil Corporation.

Originally published by Yonhap news agency, Seoul, in English 0447 25 Feb 08.

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