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LUKoil starts gas production at Uzbekistan’s Khauzak

Russia’s largest independent crude producer LUKoil has started producing gas from the Khauzak field in southwest Uzbekistan, the company’s CEO said on Thursday.

The second project phase has begun at the deposit under the 35-year Kandym-Khauzak-Shady-Kungrad production-sharing agreement, signed on June 16, 2004 in Tashkent by LUKoil Overseas (which holds a 90% stake) and Uzbekneftegaz (with 10%). The agreement came into force on November 24, 2004. „We are now starting the second stage, which will be commissioned in 2011 and will cost over $2 billion,” Vagit Alekperov told a launch ceremony, which was attended by First Deputy Prime Minister of Russia Sergei Ivanov. Alekperov said LUKoil’s investment in the project’s first stage totaled $400 million.

The production-sharing agreement provides for natural gas exploration in the Bukhara-Khiva region in southwest Uzbekistan (Kandym, Khauzak and Shady), and geologic exploration of the Kungrad block located in the Ustyurtsk region (north Uzbekistan). The companies shared costs on a parity basis in the first stage of the project. The maximum annual production rate for natural gas will amount to 11 billion cubic meter, with production expected to peak in 2012-2013, LUKoil said on its Web site. Ivanov praised the efforts of all participants in the project for its successful implementation. „LUKoil has launched large-scale work in the republic and is meeting all the requirements of Uzbek legislation, including on environmental issues,” Ivanov said. (