American-Uzbekistan Chamber of Commerce
Business Newsletter


Week in Review:

November 11, 2011 - November 18, 2011 


In this issue
AUCC in Brief
Tethys Petroleum Limited: Uzbekistan MOU signed
Tashkent holds S.Korea-Central Asia forum
Lukoil, Malaysian firm to build booster compressor station in Uzbekistan
Update on steel pipe market and mills in Uzbekistan
IMF recommends Uzbekistan to continue reforms to maintain high economic growth
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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. 

Tethys Petroleum Limited: Uzbekistan MOU Signed of 11/18/2011    


Tethys Petroleum Limited ("Tethys" or the "Company")   today announced it has signed a Memorandum of Understanding ("MOU") with the Uzbek State oil and gas company, National Holding Company "Uzbekneftegaz" ("UNG") establishing a programme for Tethys to obtain two new Production Enhancement Contracts ("PECs") on two existing oilfields in Uzbekistan.

The MOU represents an agreed timetable up to May 1, 2012 to negotiate for two new PECs one for the Chegara Group of fields and one on the West Kruk field. The PECs are expected to be a similar contractual arrangement to the PEC that Tethys has over the North Urtabulak Field in Uzbekistan that has operated successfully for some 10 years. The Chegara and West Kruk fields are located in the same area as North Urtabulak. Under this contract Tethys is allocated refined products for the oil it produces and sells these on the export market in United States dollars. The Chegara Group of fields is less developed than North Urtabulak and Tethys believes that these fields give significant potential for additional oil production in the short term.

Mamuka Murjikneli, Regional Manager, commented, "This MOU is an excellent step forward with our partners Uzbekneftegaz to work on more oil fields in Uzbekistan. Given the experience and expertise Tethys has in Uzbekistan and the region this offers a real opportunity to add to Tethys' existing portfolio of high impact projects. These additional fields can be developed in conjunction with our currently producing North Urtabulak oil field increasing our short to medium term oil production base and cash flow in Uzbekistan."

Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Kazakhstan, Tajikistan and Uzbekistan. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.

Tashkent holds S.Korea-Central Asia forum of 11/17/2011    


The fifth meeting of the Forum "Republic of Korea - Central Asia" was held in Tashkent on 15 November. Delegations of the Republic of Korea, as well as Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan exchanged views on development of cooperation during the meeting.
The purpose of the forum, which has been held annually since 2007, is to strengthen and expand the cooperation in economy, information and communication technologies, construction and transport, science, culture, education, tourism and other areas.
The relations between Uzbekistan and South Korea have been successfully developing in all directions. The legal basis for this are the agreements reached at the meetings of the heads of two states. South Korea is one of the largest investment partners of Uzbekistan. The total volume of South Korean investments in Uzbekistan's economy has exceeded $5 billion.
A number of joint projects with South Korean companies are being implemented in the mining and textile industries, production of household appliances. One of the main areas of bilateral cooperation is bringing advanced technologies from South Korea for construction of new productions in Uzbekistan and modernization of existing enterprises.
A major project - construction of the Ustyurt gas chemical complex - was launched during the visit of the South Korean President Lee Myung-bak to Uzbekistan this August. $2.6 billion of direct investments will be used for the construction of the complex.
The government and the business circles of South Korea support the projects of development of the free industrial economic zone Navoi and creation of the intercontinental logistics centre there.
The forum participants exchanged views on the development of cooperation between the Republic of Korea and the countries of Central Asia in the field of science and technology, regional development in the field of e-government, sports and other issues. of 11/16/2011   


Lukoil Uzbekistan and Malaysia's KNM Berhad Group (KNM) have signed a contract to construct a booster compressor station on the Khauzak-Shady plot worth about $72 million, the Lukoil Uzbekistan Operating Company said.

According to the contract, KNM will develop working documents, supply equipment and render services for the supervision, installation, commissioning and staff training.

The contract's implementation term is about two years. The Malaysian company won a tender to construct a booster compressor station in May of this year.

Lukoil and Uzbekneftegaz signed PSA Kandym-Khauzak-Shady including natural gas production in the Bukhara-Khiva region in Uzbekistan in 2004.

The project cost is $3.145 billion. In autumn 2007, Lukoil began producing natural gas on the Khauzak plot. In 2010, the production volume amounted to 3 billion cubic meters. All the produced gas is exported via Gazprom's main lines.

Update on steel pipe market and mills in Uzbekistan of 11/16/2011    


It is reported that due to the decline in the global demand for steel, Uzbekistan is trying to re align its production towards the manufacture of specialized, high value finished products, but this is being hampered by the lack of raw materials and manufacturing technology.

At an International Industrial Fair in Tashkent last October the management of Uzmetkombinat, the largest steelworks in Uzbekistan, announced the planned launch in 2013 of a large scale production plant for the manufacture of a wide range of steel pipes.
Mr Nariman Umerov Deputy Head of Uzmetkombinat Engineering said "We need to build specialist degassing equipment and launch pipe production as soon as possible. It will help the company not only increase its range of products but also expand its presence in world markets."
The construction of degassing equipment will cost about USD 19 million will have a capacity of 150,000 tonnes of liquid steel per year and improve the quality of the finished products seamless steel pipes with diameters of 25mm to 426mms and cylinder thickness of up to 20mm. It is thought that full production will reach 30,000 tonnes annually by 2015.
The entire project is estimated to cost USD 90 million and will be financed through loans from Uzbek banks and from the company own funds.
Uzmetkombinat has faced the current crisis with the wear -factor of 50%, a reasonable result when compared to other developed countries. This was made possible thanks to a modernization and technical re-equipment program worth USD 49 million which will be completed at the end of 2011. This program has helped the company maintain positive production dynamics during the price crisis: steel output in January to September increased by 2.2% to 572,000 tons and rolling ferrous metals by 1.9% to 553,900 tons.
An analysis of pipe consumption in Uzbekistan forecasts an increase in demand for pipes of small and medium diameter by public services and engineering and construction industries. Steel pipe production is less than 10% of the total country's needs. According to a local analysis company AFS-Research, only five enterprises out of the total domestic manufacturers, with a total capacity of no more than 70,000 tonnes, were engaged in the production of steel pipes. Most of these pipes were used in industrial and civil construction.
The Tashkent Pipe Plant joint venture which was established in 1994 with the Russian Almetiyevsk Pipe Plant and the US Capital Industrial Supply is the most prominent in Uzbekistan. Today, this joint venture has a total production capacity of 60,000 tonnes per year and is a leader in the manufacturing of pipes with a diameter of up to 127mm and has a monopoly in the production of larger diameter pipes. In 2004, it started producing pipes for the oil and gas pipelines with diameters of up to 377mm and the company plans to actively participate in this market segment. In 2012-2016, JV will invest a further USD 52 million in the production of long steel products and manufacturing of electric spiral welded steel pipes with diameters of up to 1,620mm with a production capacity of 24,000 tonnes per year.
However, the capacities of these facilities are insufficient to meet the demands of Uzbekistan domestic market without including exports. JV openly says that it cannot develop more ambitious plans due to a limited access to foreign exchange resources for the purchase of raw materials and semi finished products.
A local analyst, Mr Dilmurad Kholmatov believes that Uzbekistan desperately needs its own steel pipe production. In his opinion, this is not only a serious consideration for Uzbek producers, but could also lead to potential supply problems for Uzbekistan because pipes would have to be bought from abroad. of 11/16/2011   


Uzbekistan has achieved robust growth since the mid-2000s and has withstood the global financial crisis well, an International Monetary Fund mission's statement reads.

An International Monetary Fund mission led by Mrs. Veronica Bacalu, Deputy Division Chief in the IMF Middle East and Central Asia Department, visited Tashkent on Nov. 2−15, 2011 to conduct discussions in the context of the Article IV consultation. The mission issued the statement following the visit.

"At 8 percent on average over the last five years, Uzbekistan's growth is higher than the average growth in Central Asia. Fiscal surpluses registered over the past years, high official reserves, low public debt, a stable banking system, and prudent borrowing from international financial markets have shielded the country from the direct impact of the global crisis," the statement reads.

"GDP growth was reported at 8 percent in 2010 and is at 8.2 percent through September 2011; and inflation has increased somewhat in recent months. Strong growth was registered in services, transport and communication, trade, and agriculture and was driven by buoyant domestic consumption supported by large wage and pension increases.

Investment has also continued, led by government's industrialization program and supported by higher foreign direct investment.

"Important initiatives were undertaken in 2011 to support small businesses and facilitate private sector development. The authorities have initiated commendable measures, including streamlining access to bank financing, simplifying registration and issuance of permits, extending the moratorium on tax inspections for newly created small enterprises from 2 to 3 years; and simplifying customs certification procedures," the statement reads. 

The main challenge in the short run is the need to bring inflation down through effective macroeconomic and financial sector policies. Over the medium term, the main challenge is to further increase the real income per capita by raising productivity and ensuring sustainable and inclusive growth.

To this end, the mission welcomes the ongoing government programs to create new jobs for the young and growing population and continue strengthening social protection. In addition, the authorities of Uzbekistan have rightly embarked on a series of ambitious programs to modernize and diversify the economy, including exports, and increase the role of the private sector. Moreover, substantial increases in bank capitalization contributed to the stability of the banking sector and are facilitating the authorities' development programs.

"To succeed with these programs, the authorities should continue tightening monetary policy and pursue a more flexible exchange rate; undertake measures to further deepen financial sector intermediation; continue reforms, particularly in the exchange system, tax administration, public finance management and governance; and improve the quality and dissemination of data.

"The mission underscored that the Fund staff stands ready to assist Uzbekistan in its reform efforts, including through technical assistance.

"The mission is grateful for the excellent cooperation with the Uzbek authorities and the constructive discussions." 

The official exchange rate is 1772.98 sums to $1 on Nov. 15.
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Contact Information


The American-Uzbekistan Chamber of Commerce
1300 I Street, N.W., Suite 720W
Washington, DC 20005
phone: 202.509.3744
[email protected]  








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