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Lukoil and Uzbekneftegas to invest $3 billion in Kandym field expansion

Uzekistan Lukoil Kandym FEED work nears completion

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe Russia largest privately-owned company Lukoil Oil Company (Lukoil) and the national oil company (NOC) Uzbekneftegas National Holding Company (Uzbekneftegas) are completing the front end engineering and design (FEED) work for the expansion of the Kandym gas field in the Bukhara region, at the center west of Uzbekistan.

In June 2004, Lukoil and the State-owned company Uzbekneftegas signed a production sharing agreement (PSA) to develop three gas fields in Uzbekistan, named Kandym, Khauzak and Shady.

In this PSA, Lukoil and Uzbekneftegas agreed to cooperate in the development of these gas fields and to share the working interests during 35 years in such a way that:

 – Lukoil 85%

 – Uzbekneftegas 15%

At that time the first target is to appraise these fields to evaluate the size and the quality of their reserves in natural gas.

The first production started from the Khaukaz and Shady gas fields in 2007.

Lukoil_Kandym_Uzbekistan_Project_MapIn November 2011, Lukoil and Uzbekneftegas extended the production to the Shady West area so that in 2012 the Khaukaz and Shady gas fields could deliver:

 – 3.8 billion cubic meters of gas

 – 19,000 tonnes of condensate

In parallel to this first phase of development, Lukoil and Uzbekneftegas completed their evaluations of commercial reserves in natural gas and condensate of the three fields.

With 26 billion cubic meters additional reserves of gas, Lukoil and Uzbekneftegas initiated the second phase of the project with the development of the north Shady area.

This expansion should start commercial operations in 2014.

 So far the exploration and development of the Khaukaz – Kandym – Shady gas fields required $2.5 billion capital expenditure and now Lukoil and Uzbekneftegas are preparing to invest an additional $3 billion to develop Kandym along the boarder with Turkmenistan.

Hyundai Engineering completed Kandym FEED

In August 2011, Lukoil and Uzbekneftegas sanctioned the call for tender of the pre-front end engineering and design (pre-FEED) and FEED to Hyundai Engineering Construction Ltd (Hyundai Engineering) for the Kandym Group of Fields Development project.

In that respect the Kandym project covers in fact the development of 6 gas and condensate fields: Akkam, Kandym, Khodji, North Shady, Parsankul and West Khodji, all located in the Karakul District of the Bukhara Region.

The gas treatment strategy as these fields took more time to Lukoil and Uzbekneftegas as the reservoirs contain a high content of hydrogen sulfides.

In March 2012 Lukoil and Uzbekneftegas established the Kandym Enterprise Construction Directorate to run the joint venture dedicated to this Kandym Group of Fields Development project.

From the FEED work completed by Hyundai Engineering, the Kandym project should include:

 – 100 gas production wells

 – 400 kilometers of gas gathering pipelines system

Lukoil_Kandym_Uzbekistan_Project – Gas booster compression station

 – Gas central processing facility (CPF)

 – 70 kilometers export pipeline

 – Gas treatment facilities

 – 90 kilometers water inlet pipeline

 – Water treatment facilities

 – 80 MW gas-fired power plant

 –  Storage and loading terminal for natural gas, condensate and granulated sulfur

 – Campground for 1400 persons

The Kandym Gas central processing facility (CPF) should have a capacity of 810 million cubic feet per day (cf/d).

The compression stations to boost the gas to the Kandym Gas central processing facility (CPF) should be located at Kuvachi-Alat and Northern Shady.

As the project has been approved by the Uzbek Government, Lukoil and Uzbekneftegas are planning Hyundai Engineering to start the engineering, procurement and construction (EPC) work of the Kandym project on the second half 2014 in expecting the first train of the Kandym central processing facility to come into commercial operations at the end of 2016.

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