Boston, MA -- (ReleaseWire) -- 12/31/2013 -- Conventional gas deposits would support Uzbekistan's hydrocarbons industry, though we project a continued decline in oil production. Consumption growth in both oil and gas will be curtailed by the diversion of gas to external markets to meet its export obligations, a failure to meet its domestic refined products demand and restrictions on fuel imports.
The main trends and developments in Uzbekistan's oil and gas sector are:
- We have forecast a very gradual decline in oil reserves, with 490.9mn barrels (bbl) to remain by 2022, down from the EIA's forecast of 594.0mn bbl for 2013. We have revised our gas reserves forecast owing to moderation of expectations of the country's potential. We now expect that some discoveries and exploration activity would keep gas reserves stagnant at about 1.8tcm through our forecast period.
- Uzbekistan has an estimated 340bn bbl of oil shale deposits and Uzbekneftegaz has established a US $600mn joint venture (JV) project that will convert the oil shale into crude oil to be processed into petroleum products. It has started first drilling at the Sangruntau deposit in March 2013, and is aiming to produce 2mn tonnes per annum (tpa) of liquids from oil shale (40,164 barrels per day, or b/d) between 2014 and 2015 and 8mn tpa (160,656b/d) by 2018 from the Sangrantau deposit alone. It has also started studying reserve potential at areas in the Kyzylkum desert and Baisun Mountains; however, we have not factored this in our forecast until the success of its first development is proven.
- Without early success in enhanced recovery, shale-based production and/or new field development, we believe crude oil supply - including lease condensate but excluding natural gas liquids (NGL) - will fall to 59,900b/d by 2017. However, additional NGL volume - thanks to higher gas output from Uzbekistan -should help stem a rapid fall, and see total liquids output fall to a lesser extent to 92,540b/d in 2017. By 2022, an increase in NGL production could see liquids output partially supported at about 85,360b/d. We expect Uzbekistan's net crude oil exports to fall from an estimate of 20,100b/d in 2012 to 14,300b/d in 2017, and continue trending downwards to 12,600b/d by 2022 as a result of falling crude oil production. An expansion in Uzbekistan's refining capacity poses upside risk to this outlook.
- The lack of domestic refined oil production will limit gains in domestic consumption. We are forecasting a relatively slow growth in oil consumption from 106,000b/d in 2012 to 108,700b/d in 2017, rising gradually to 111,400b/d by 2022. This would also see the country's net refined oil imports rise from an estimate of 25,300b/d in 2012 to 38,700b/d by 2022. If the Uzbek government persists with fuel import restrictions without upgrading the country's state-owned refineries or attracting private downstream investment, demand could be suppressed further.
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