Saneg, the private company tasked with giving Uzbekistan’s mature oilfields a second life, aims to ramp up oil production by 30% this year to 730,000 tonnes (14,700 barrels per day), its CEO Tulkin Yusupov said in a presentation in Tashkent last week.

Uzbekistan is better known for its natural gas than its oil, boasting the third-highest gas production in the CIS region in 2022, totalling nearly 49bn cubic metres, according to the Energy Institute’s Statistical Review of World Energy. It meanwhile produced only 63,000 bpd of oil and condensate in the same year. This leaves the country dependent on oil and fuel imports, particularly from Russia.

In an effort to revive the sector, the Uzbek government handed licences to 103 oilfields in 2019 to Saneg. The company had invested $750mn in the projects by last autumn, as well as applying international, advanced technologies such as horizontal drilling, to expand their output. These fields yielded 498,500 tonnes of oil and 496.5mn cubic metres of gas in 2020. After losing some time as a result of pandemic-related disruptions, Saneg managed to increase this to 560,400 tonnes and 1.26 bcm of gas by 2023. Saneg’s oil production costs range between $150-200 per tonne, or $13.6-20.5 per barrel.

 

Doing things differently

Uzbekistan has effectively hived a significant share of previously state-controlled oil assets to the private sector by passing them to Saneg, in order to boost performance. Previously its fields belonged to national oil and gas producer Uzbekneftegaz (UNG).

Besides working hand in glove with oilfield services companies like Schlumberger and Haliburton, along with international technology and equipment suppliers, as well as applying private capital, Saneg has also worked closely with Uzbek scientific and technological centre GRDC, which has reinterpreted geophysical studies of the company’s fields, as well as undertaken well studies and technical measures to boost flow rates.

Yusupov also attributes Saneg’s success to a honed focus on oil extraction at its fields, which previously belonged to national oil and gas company Uzbekneftegaz (UNG), whose focus is primarily natural gas. With this honed focus, Saneg can bring added knowledge and expertise.

While Saneg is profit-orientated and indeed making that profit, Yusupov also stressed how importantly the company takes its societal responsibility.

“We work first and foremost for the domestic market,” he said. “Our success story is based on the appreciation of society. If they see your success then you build trust and more assets are entrusted to you. We focus on quality but we are aware that quality and performance alone are not enough to guarantee success so we focus on society.”

The goal is expanding oil production to 1.6mn tonnes per year by the end of the decade. Taking a central part of future plans will be the $2.5bn development of the Yangi Uzbekistan bitumen oilfield, set to produce 1mn tpy at peak. Even though it works with mature fields, Saneg’s resource base is relatively large. It has 24.8mn tonnes of developed (category A), 26.4mn tonnes of prepared (category B) and 100.9mn tonnes of explored (category C1+C2) oil resources.

The boost in gas flow was primarily achieved through a $12.5mn programme to capture and sell rather than flare gas released during oil extraction – which has the added benefit of reducing CO2 emissions. At the Severny Shurtan, Shirkent, and Turtsari fields, Saneg is now monetising gas that has been burned at flares for decades. With the extra focus on natural gas development, Saneg also raised condensate extraction from zero in 2022 to 34,200 tonnes last year.

On the environmental front, Saneg has also taken steps to address its methane emissions – an issue that has gained Central Asia international attention recently following reports of super-emitting leaks in Kazakhstan and Turkmenistan. This likewise saves more gas that can then be sold.

Gas resources are assessed at 48.5 bcm developed, 44.2 bcm prepared and 13.9 explored. Saneg is targeting 1.8 bcm of annual gas supply, by developing tight reservoirs below the traditional payzones at its fields.

 

Downstream

Saneg also made its foray into the downstream sector in 2020, gaining control of the Fergana oil refinery. Built in 1959, the plant has not been modernised since the collapse of the Soviet Union. Saneg launched a $400 modernisation programme, due to wrap up in 2025, which aims to double throughput to 2mn tpy and raise processing depth from 84-86 to 93%. Once the revamp is finished, the refinery will produce cleaner Euro 5 standard gasoline and diesel, instead of the current Euro-2 class, along with A-1 and TC-1 jet fuel and Group II+/III base and motor oil.

These products will be produced in part from Saneg’s own oil supply, supplemented by imports and other domestic sources. In turn, they will satisfy local demand, making the domestic market more self-reliant.