Wednesday, 17, July, 2024

Uzbekistan will conduct an inventory check of all production sharing agreements (PSA) in effect. This is provided for by president’s now renowned Measures to expedite market reforms and harmonize national legislation with World Trade Organization (WTO) agreements Decree.

The Ministry of Energy, together with the Ministry of Mining and Geology, the Ministry of Economy and Finance and the Ministry of Justice, has been instructed to complete a full inventory check of all production sharing agreements entered into by Uzbekistan by August 1, 2024.

The Ministry of Investment, Industry and Trade, together with the Ministry of Justice, the Ministry of Energy, Uzbekneftegaz and Uzavtosanoat, are also required to complete an inventory check of all investment agreements inked by the government to this date.

After this, it is necessary to submit specific proposals based on its results to the Presidential Administration.

This is being done to bring national legislation into compliance with the WTO agreement on trade-related investment measures (TRIMs), including the requirements for non-application of localization or export obligations, the decree underscored.

The agreement prohibits WTO member states from implementing restrictions that negatively impact on foreign investment in the manufacturing sector. TRIMs only cover measures that prevent trade in goods.

Back in June 2019, President Shavkat Mirziyoyev admitted that Uzbekistan had a debt to the Russian Lukoil of $600 million for gas and wondered why national interests were not taken into account when entering not this production sharing agreement.

He also then noted the corruption of the oil and gas sector, saying that a certain official received $80 million for the Ustyurt gas chemical complex.

In December 2022, in an address to the parliament and people of Uzbekistan, Shavkat Mirziyoyev stated that the country would adopt a 10-year geological exploration program in order to increase gas reserves. In particular, he said, large foreign investors will be drawn to the Ustyurt plateau for exploration work in highly promising deep layers, but taking into account the national interests of Uzbekistan, which will be inserted into relevant laws.

“All issued licenses for gas production will be reviewed, and appropriate measures will be taken for inefficiently operating enterprises. As you can see for yourself, energy has turned into political issue around the world. Therefore, we must enshrine [national interests in law] so that underground deposits will bring benefits for the next ten to twenty years,” the president emphasized.

Energy Minister Zhurabek Mirzamakhmudov said in a recent interview that in some cases, investors were assigned additional obligations within the framework of agreements, but they were not disclosed due to the risks of a deterioration in the investment climate.

In 2004, the Government of Uzbekistan signed a production sharing agreement (PSA) with Lukoil for the Kandym-Khauzak-Shady projects (for a period of 35 years, extended in 2014 for another 7 years - until 2046) and South-West Gissar (took effect in 2007 and will be valide for 36 years, until 2043).

A PSA was signed with the Russian Gazprom for the Shakhpakhty field (since 2004 - for 15 years, extended for 5 years in 2018), and Dzhel (signed in 2018 for 25 years).

Another PSA was signed in April 2017 for the Mustakillikning 25 Yilligi (25th Anniversary of Independence, M25) field in the Surkhandarya province - for 35 years with the construction of a gas chemical complex. Energy Minister Zhurabek Mirzamakhmudov noted that geological exploration work on this project will take at least eight years.

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