ExxonMobil Signals Move into Uzbekistan

United States oil giant ExxonMobil has signed a preliminary agreement to carry out exploration in Uzbekistan, officials in the Central Asian state say. Energy analysts say the move offers Uzbekistan a much-needed opportunity to boost production volumes.

A delegation led by Phil Mulhall, vice-president of ExxonMobil Upstream Ventures, held talks with the national oil and gas firm Uzbekneftegaz in the capital Tashkent last month.

Uzbekneftegaz reported that a memorandum of understanding was signed on possible exploration and development work at deposits in the East Surkhan and Kashtar fields in the southwest of the country.

NBCentralAsia energy experts say a move into Uzbekistan by the US firm would be a major step forward for the country.

"It is a clear message to other investors that they can and should be operating in in Uzbekistan," Rovshan Ibrahimov, head of Azerbaijan’s Energy Research Centre, said. "Until now, the Uzbek oil and gas sector has been considered risky, for political and economic reasons. ExxonMobil's initiative indicates that there’s significant potential for exploiting deposits and exporting natural gas."

Experts in Uzbekistan say the East Surkhan and Kashtar fields, located close to Uzbekistan’s borders with Afghanistan, Turkmenistan and Tajikistan, could contain 674 million tons of oil equivalent.

Ibrahimov says the arrival of ExxonMobil could attract other oil and gas majors to the country, but adds the proviso that the government would need to trim its policies to encourage western investors of this kind. At the moment, the only foreign players involved in exploration work are Russian, South Korean, Chinese and Malaysian.

Dmitry Verkhoturov, an energy expert in Moscow, said Uzbekistan was keen to attract companies that can bring the most advanced technologies possible to make up for its flagging capacity. The country urgently needed to boost oil and gas production, he added, as despite its significant natural gas reserves, "the power industry is so short of gas that it’s having to convert power stations from gas to coal".

Dilmurod Kholmatov, an economist in Tashkent, said ExxonMobil was exactly the kind of company that could bring hi-tech exploration methods to bear.

This article was produced as part of IWPR’s News Briefing Central Asia output, funded by the National Endowment for Democracy.