Korea, Uzbekistan settle Surgil gas field payment issue

South Korea and Uzbekistan have reached an agreement on an unpaid $1bn with regard to their joint Surgil gas field project. The countries plan to develop the project and produce petrochemicals and gas.

A consortium of South Korean companies, comprising Lotte Chemical, GS E&R and state-owned Kogas, and state-owned Uzbekneftegaz (UNG) established joint venture Uz-Kor in 2007 to promote the business, with the consortium and UNG each holding a 50pc stake.

Uz-Kor produces and sells gas through UNG's subsidiary UTG, with UTG buying the gas at a fixed price in US dollars but selling it to the Uzbek domestic market in local currency. But UTG has yet to pay Uz-Kor for the gas produced because of concerns over a large deficit arising from paying a fixed gas price in US dollars.

The repayment issue was also because of the depreciation of the Uzbek currency, according to the economy and finance ministry (Moef), although further details were not disclosed. But the two countries have recently agreed on a repayment plant for the Surgil project receivables, six years after the receivables were incurred in 2017.

South Korea and Uzbekistan plan to jointly develop the Surgil gas field, and are looking to build and operate gas and petrochemical plants. This is scheduled to take place over 2008-2041, with commercial production having started in 2016.

The Surgil field produces, pre-processes and transports over 115,000 t/yr of gas condensate, and transports over 3bn m3 of natural gas, according to Uz-Kor.

The Ustyurt Gas Chemical Complex (UGCC) was completed in September 2015, and consists of a gas separation plant, an ethylene plant, a 387,000 t/yr polyethylene plant, an 83,000 t/yr polypropylene plant and a power plant, Uz-Kor's website shows. The complex can also produce 102,000 t/yr of distillation product and 8,000 t/yr of pyrolysis oil, which is sent to Uzbekistan's 61,000 b/d Bukhara refinery.

The UGCC has currently already produced over 180,000t of PE and over 40,000t of PP, and export of polymer products began in December 2015 to central and east Asia, CIS and Europe.

By Tng Yong Li