07-08-01 A production-sharing agreement (PSA) was recently signed between Russian leading oil company LUKoil, the international energy company Itera and Uzbekneftegaz, the state oil concern of Uzbekistan. The deal was signed by LUKoil President Vagit Alekperov, Itera President Igor Makarov, Uzbekneftegaz First Deputy Chairman Asror Abidov and Uzbekistan's Deputy Prime Minister Valery Atayev. The agreement was initially drafted in Moscow last May, Atayev noted.
The PSA provides for the three enterprises to develop the Bukhara-Khiva and Gissar oil and gas fields jointly while also carrying out geological exploration work in the southern region of the Central Asian state. LUKoil and Itera will each hold 45 % stakes in the project, and the remaining share will be held by Uzbekneftegaz.

Under the agreement, exploratory work should be concluded by the end of December. The partners have 25 years to develop the fields and will also have the option of extending the term of the deal to 35 years. The fields arebelieved to hold some 250 bn cm of natural gas and 10 mm tons of crude oil and are expected to yield 8-10 bn cmpy of gas. The cost of developing the concession has been estimated at $ 750 mm.
The partners are not planning to export gas directly to Western markets. Instead, Itera will deliver the gas to consumers in Central Asia by means of swap arrangements, a LUKoil representative said.

Though it is the third largest natural gas producer in the Commonwealth of Independent States (CIS) and the eighth largest gas producer in the world, Uzbekistan has not had an easy time carving out a niche on the international gas market or attracting foreign investment in its gas sector. Its major problem is its geographical location; the country is completely landlocked and has no access to rivers or seas that might serve as trade routes.