Uzbekistan launches further reforms of the fuel and energy industry



Uzbekistan continues to reform its fuel and energy industry. On July 9, 2019, the President of Uzbekistan signed a Resolution that provides for measures to improve the oil and gas sector (PP-4388)1.

Another Presidential Resolution, No. PP-4522 “On Measures to Improve the Organization and Conducting of Exploration Activities for Oil and Gas” dated November 18, 2019, provides for measures to improve the efficiency and effectiveness of exploration for hydrocarbons.

Structural changes

The State Committee for Geology and Mineral Resources (Goscomgeology) is assigned the functions of:

a. Conducting research, regional geological surveys, geophysical and drilling operations for the identification and preparation of prospective structures for the discovery of new hydrocarbon deposits.

Until the end of 2019, Uzbekneftegaz JSC will transmit to the agency information on existing projects for research and geophysical work, including all available materials for prospective areas, investment blocks and hydrocarbon deposits.

Uzbekneftegaz JSC will continue exploration in existing projects that do not have a license, subject to completion of drilling of previously launched parametric and exploratory wells.

b. Organization of work for the accelerated development and rebuilding of hydrocarbon reserves, increasing the efficiency and effectiveness of exploration work aimed at ensuring the discovery of new hydrocarbon deposits.

In addition, Goscomgeology:

  • is the working body of the Working Group for the Coordination of the Implementation of the Strategy for the Development of the Mineral Resources Base of the Republic of Uzbekistan and the owner of information on existing projects for research and geophysical work, as well as for all promising areas, investment blocks and hydrocarbon deposits;
  • acts as the executive body responsible for coordinating and implementing investment projects in the field of geological exploration of oil and gas prospective structures with the participation of potential foreign investors, with the exception of existing projects of Uzbekneftegaz JSC;
  • establishes targets for the growth of hydrocarbon reserves for subsoil users conducting exploration work for oil and gas, taking into account the balanced development and conservation of the mineral resource base of the republic as a whole.

Draft legal acts in the field of geological exploration, use and protection of mineral resources, as well as mining relations management are now coordinated with Goscomgeology.

Annual state programs

From 2020, the annual state programs for the development and rebuilding of the country’s oil and gas reserves, which are developed and approved by Goscomgeology, are subject to approval by the Ministry of Energy, the Ministry of Economy and Industry and the Ministry of Finance. Within the framework of these programs, international exploration standards are being introduced with the participation of leading foreign consulting companies and experts.

According to Goscomgeology, the following programs are financed from the state budget and other sources:

  • research, regional geological surveys, geophysical and drilling operations for oil and gas;
  • measures to provide modern equipment, high technology, software products, special and motor vehicles.

The shares of Uzbekgeofizika JSC and the Institute of Geology and Exploration of Oil and Gas Fields JSC were transferred to the State Assets Management Agency and they will carry out their activities as part of the State Committee for Geology.

At the same time, Uzbekneftegas JSC retains exploration for hydrocarbons in existing projects that do not have a license, with the condition that drilling of previously begun parametric and exploratory wells will be completed.

For investors

For investment blocks where foreign investors have agreements with Uzbekneftegaz JSC (indicated in a separate list), it will be decided later whether there will be cooperation on geological exploration of mineral resources with Goscomgeology.

However, after the expiration of the concluded agreements with foreign investors, investment blocks and promising areas will be transferred to Goscomgeology. After that, during the year, the boundaries and areas of investment blocks will be reviewed to optimize the process of attracting investors.

From January 1, 2020

  1. Subsoil plots containing strategic types of mineral resources specified in the Presidential Resolution of May 24, 2017, No. PP-3000 are provided for use on the basis of auction tenders that ensure the transparency of licensing. The initial value of this right to use for geological exploration is determined in the amount of the subscription bonus rate; for mining – in the amount of the commercial discovery bonus rate. At the same time, it should not be lower than the expenses of Goscomgeology for the implementation of prospecting and exploration work.
  2. Goscomgeology will annually report to parliament on the use of budget funds allocated to it and the results achieved.
  3. The practice will be established of concluding investment agreements for the development of deposits of strategic types of minerals by evaluating investment geological objects, preparing tender documents and organizing tenders based on transparent procedures involving independent consultants, auditors and technical support from international organizations and financial institutions.

PP-4522 also includes a roadmap defining measures to improve the organization of exploration. In particular, the roadmap provides for the introduction of international experience in digitizing oil and gas and geological information, the development of a list of priority geological objects for oil and gas to attract investment and the creation of the appropriate structure for the coordination of geological exploration for oil and gas under Goscomgeology.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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