[Sponsored Report] Kogas’ Uzbek project gaining steam

Uzbekistan’s Surgil gas field. Provided by the company

The state-run Korea Gas Corporation, the prime player in the gas industry here, is bolstering its overseas business through numerous projects including oil field development.

Along these lines, the company has embarked on the Uzbek Surgil project, an effort that involves combining Korea’s world-famous plant construction and operation capabilities with natural gas resources in Uzbekistan. By helping to tap these valuable resources, the company expects to make a significant contribution to Uzbekistan’s economic development.

The project centers on the Surgil gas field near the Aral Sea, where Kogas will help build and operate a chemical plant to secure gas in the region. Uzbekistan’s state gas company, Uzbekneftegaz (UNG), is developing the site, which was discovered in 2002.

Kogas and Uzbekneftegaz signed a memorandum of understanding in 2006 to explore the gas field. Two years later, Korea Consortium including Kogas and Uzbekneftegaz jointly established Uz-Kor Gas Chemical to spearhead the Surgil project. The project was structured in a way that minimizes financial risk for Korea. As part of the deal, Kogas will sign an agreement with the Uzbekistan government to limit risks related to exchange rates, money transfers and other areas.

Officials expect to complete a feasibility study by the end of this year, which will then allow them to line up project financing and make final investment decisions by the first half of 2011 before beginning construction. The plant should be in full operation by early 2015.

The project is planned to invest $4 billion, including $600 million for gas field development and $2.4 billion for construction of the chemical plant. The facility will provide 4.5 billion cubic meters of gas every year in addition to 380,000 tons of high-density polyethylene and 80,000 tons of polypropylene annually.

By Lee Ji-hyun [concordia@joongang.co.kr]