American-Uzbekistan Chamber of Commerce
Business Newsletter

 

Week in Review:


October 21, 2011 - October 28, 2011 

 

In this issue
AUCC in Brief
Lukoil to up gas share in total output to over 35% by 2031
Kyrgyz-Uzbek border re-opens
Pipe Metallurgical Company (TMK) Opened Sales Office
Small investors struggle while Afghanistan hopes for big deals
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AUCC Members
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AUCC in Brief 

Established in 1993, the American-Uzbekistan Chamber of Commerce (AUCC) is a private, non-profit trade association representing interests of U.S. businesses ranging in size from small private enterprises to large, multinational corporations conducting business in Uzbekistan.

Our Mission: To advocate the views of the business community to ensure that private sector positions are considered during the development of key policies that impact American businesses and the future of U.S.-Uzbekistan relations.

Our Objective: To serve the needs of its members by strengthening commercial relations between the United States and Uzbekistan. 

Lukoil to up gas share in total output to over 35% by 2031 from 20%

http://www.platts.com of 10/27/2011

 

Russia's second-largest oil producer, Lukoil, plans to increase the share of gas output in its total production figure from 20% in 2011 to over 35% in 2021, mostly thanks to higher gas output from the company's projects in Uzbekistan, Lukoil said in a statement Thursday.
"Under the draft program for exploration and production development for 2012-21, the main increase in gas production is expected in Uzbekistan, where Lukoil acts as the operator of PSA projects Khauzak-Shady-Kandym-Kungrad and Gissar," it said, adding that Lukoil's board of directors expects to consider the draft program in December.
Lukoil holds 100% in the Gissar project and 90% in Khauzak-Shady-Kandym-Kungrad, with the remaining 10% controlled by the state-owned Uzbekneftegaz.
The company will also look into ways to increase associated gas utilization and consider prospects for shale gas production in Russia, taking into account risks of shale gas projects in eastern Europe, the statement said.
In 2013, the company plans to start construction of a trunk pipeline to transport gas from the South-Messoyakhskoye, Khalmerpayutinskoye and Pyakyakhinskoye fields in the Yamal-Nenets autonomous region, it said.
The company plans to increase its hydrocarbon output to 180 million mt/year (3.6 million b/d) of oil equivalent in 10 years from the current 100 million mt/year, Lukoil President Vagit Alekperov said earlier, explaining details of the 2012-21 draft development plan.
Lukoil's annual investments in core operations are to exceed $10 billion over the next 10 years, he said.

Kyrgyz-Uzbek border re-opens

http://centralasiaonline.com of 10/26/2011

 

Late October 24, Kyrgyz Border Troops commander Maj. Gen. Zakir Tilenov and Uzbek Border Troops commander Maj. Gen. Ruslan Mirzayev met in Andizhan, Uzbekistan, and agreed to re-open the Dustlik/Dostuk crossing, she said. No other border crossings have been reopened.

Tilenov and Mirzayev discussed the evolving situation on their shared border and the strengthening of border security co-operation.

Dustlik/Dostuk will be open to pedestrians and vehicles from 8am to 6pm. Summertime hours will be 7am to 8pm, according to the Kyrgyz Border Forces.

The re-opening comes 18 months after Uzbekistan closed the border with Kyrgyzstan after the April 2010 overthrow of then-Kyrgyz president Kurmanbek Bakiyev.

Residents of Osh Oblast, Kyrgyzstan, which borders Uzbekistan's Andizhan Oblast, expressed gratitude upon hearing the news.

"It's great that our border guards were able to reach agreement with their colleagues from Uzbekistan," Nodira Samiyeva, 28, an ethnic Uzbek in Osh Oblast whose relatives live in Namagan, Uzbekistan, said. "Now we'll be able to visit our relatives without difficulty. I haven't seen my sister in more than a year, since she married an Uzbek citizen."

Samiyeva said she'd already phoned her sister and she will go to Andizhan soon.

"People have been waiting a long time for the Kyrgyz-Uzbek border to re-open," Svetlana Gafarova, an analyst at the Kyrgyz NGO Southern Vector, told Central Asia Online. "Now trade and economic relations ... can be renewed. The market in Osh city was always cheap when we were receiving Uzbek early-season vegetables, berries, fresh greens and fruit."

Kyrgyz-Uzbek relations are beginning to acquire civilised methods of co-operation, she said.

"The Kyrgyz authorities succeeded in convincing Uzbekistan to open one of the main points on the Kyrgyz-Uzbek border, which shows the two countries' self-interest in constructive facilitation of co-operation," Kyrgyz political scientist Ikbol Mirsaitov told Central Asia Online. "Now it's important to legally open markets, so that people can trade freely, which will prevent smuggling."

The two sides still need to monitor the border closely to prevent crossings by religious extremists or terrorists, Mirsaitov said, saying that is "the most pressing issue at this time for the Central Asian countries."

Uzbeks also found the border re-opening noteworthy.

"It's interesting that the border is opening right before the (October 30 Kyrgyz presidential) election," independent Uzbek political scientist Nizam Khakkamov said. "Recently, Kyrgyz special services in Osh wiped out a terrorist group and used that (event) to say a danger existed. But Uzbekistan opened the border anyway, so the Kyrgyz succeeded in convincing their Uzbek colleagues that (the Kyrgyz) can keep the situation under control."

"We'll be hoping that the remaining border checkpoints will soon re-open," he said.

Kyrgyzstan and Uzbekistan share 16 other border crossings that remain closed, according to Kyrgyz Border Troops.

Pipe Metallurgical Company (TMK), one of the world's largest manufacturers of tubular products for oil and gas industry and the leader of the Russian pipe market, has opened a sales office at Tashkent in Uzbekistan.
The Trade Mission is open to implement more rapid interaction with the oil and gas companies of Uzbekistan. The opening of representative offices in Uzbekistan as an important step in the development of trade and economic ties with the republic, to promote the products of PMC at the national wholesale market.
Oil & gas market in Uzbekistan is important for the TMC, as a major consumer of tubular products and holds a leading position in Central Asia for natural gas production. Besides its own projects for production of hydrocarbons by the company Uzbekneftegaz on the territory of the Republic learn deposits are Russian and foreign companies as Lukoil, Gazprom, Petronas, CNPC, KNOC and others who are current or prospective partners trims.
Afghanistan is in desperate need of investment to invigorate its tiny, fragile economy, but on top of the grave physical dangers of the decade-old war, businesses are put off by corruption, pitiful infrastructure, and a slothful bureaucracy.
Even after the billions of dollars of Western aid that have been pumped in, Afghan gross domestic product was only $15 billion last year, smaller than that of Cameroon, El Salvador and Uganda, and its jobless rate is around 30 percent. As it looks beyond the 2014 deadline for foreign combat troops to leave, the government is banking on potentially huge mining projects to bring in cash, not least to pay for the disciplined security forces it needs to prevent the country being sucked into a full-blown civil war.
But without a layer of small enterprises with the capacity to provide jobs, goods, services and taxes, the hoped-for enriching effect of big business will be severely limited. Yu Minghui, a Chinese merchant who has been trying to build a small steel plant on the outskirts of Kabul since 2003, should be welcomed with open arms. His factory will employ around 80 Afghans, and in a bright "swords into ploughshares" idea, recycle the military wreckage that decades of conflict has scattered across the country into steel wire for buildings.
Progress has been painfully slow, he says, and the Afghan authorities obstructive and money-grabbing. "To secure stable power supply alone, I had to wait two years," Yu said. "Even small matters like visa for technicians can be time-consuming, and additional money is sometimes demanded to make the whole process quicker." Lack of local manufacturing has led to a reliance on imports, which in turn discourages investment in domestic production. "Low quality products from other countries have a very bad impact on our products," said Ahmad Khalid Yarmand, manager at the Afghanistan Chamber of Commerce and Industries in the western city of Herat. "They are cheap so everyone prefers to use those products more than ours."
Foreign investment into Afghanistan has always been tiny, according to the United Nations Conference on Trade and Development (UNCTAD). Billions in aid cash is still pouring in, but foreign direct investment in 2010 was about 4 percent of that into neighbouring Pakistan, and less than a tenth of Uzbekistan.
In the World Bank's 2011 'Doing Business' report, which measures how regulations affect the ease with which entrepreneurs can start and run companies, Afghanistan ranked 167 out of 183 countries, a survey which does not even include security risks. Many businessmen were unwilling to talk about the perils of working in a country where fighting kills on average more than 200 civilians every month, violence is spreading into once-peaceful areas, and travelling around swathes of the land is dangerous even for Afghans.
Some elements of Afghanistan's hostile business climate cannot be blamed purely on the war or officialdom. Landlocked and with few direct international flights, Afghanistan brings in almost all of its goods by truck from Pakistan, with tolls, bad roads and long journeys making prices expensive. Most Afghanistan-bound containers from China sail to Pakistani port Karachi, then are driven across the border.
Ye Shangqiang, a 60-year-old Chinese businessman who has sold construction and decoration products in Kabul since 2003, cited astronomical transport costs as one of the biggest obstacles to commerce. "These days, the total cost of shipping a 40-feet container from China to Kabul is as high as $20,000 due to delays and corruption," he said. Ye said the business environment has worsened since his arrival, and he was not optimistic about it improving. "If you have $100,000 investment plans here, I will say go ahead, but if you want to put down $1 million ... think twice." It will take a long time for Afghanistan to build the structures and culture that promote business, said Nicklas Norling, a fellow with the Central Asia-Caucasus Institute and Silk Road Studies Programme, a think-tank in Washington.
For the moment, getting money into the treasury is a higher priority. "Afghanistan is in urgent need of a steady income stream to pay its expenses. Only mining and natural resources exploration can accomplish this in the short term," he said. Meanwhile, aspiring steelmaker Yu struggles on with indifferent bureaucracy.
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The American-Uzbekistan Chamber of Commerce
1300 I Street, N.W., Suite 720W
Washington, DC 20005
phone: 202.509.3744
[email protected]
www.aucconline.com  

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