New horizons in the development of oil and gas industry: Case of Uzbekistan | Статья в журнале «Молодой ученый»

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Рубрика: Экономика и управление

Опубликовано в Молодой учёный №17 (76) октябрь-2 2014 г.

Дата публикации: 21.10.2014

Статья просмотрена: 67 раз

Библиографическое описание:

Парпиев, Д. Б. New horizons in the development of oil and gas industry: Case of Uzbekistan / Д. Б. Парпиев. — Текст : непосредственный // Молодой ученый. — 2014. — № 17 (76). — С. 333-335. — URL: (дата обращения: 07.12.2021).

Uzbekistan, having worked out its own model of economic development, has been moving rather successfully towards creating an innovation economy, in which oil and gas industry occupies a special place. For the development of this industry a series of effective measures were adopted and implemented at the state level, which include, above all, the laws «On subsoil» (Revised), «On production sharing agreements», «On investments and investment activities», resolutions of the President of Uzbekistan «On measures to improve the organization of activities of the National Holding Company (NHC) «Uzbekneftegaz», dated 21 August 2006, «On measures to fundamentally improve the organization of exploration and the activity of the State Committee of the Republic of Uzbekistan on Geology and Mineral Resources» dated January 17, 2007, and Presidential Decree «On measures for further development of alternative energy sources» dated March 1, 2013, etc.

Hydrocarbons, primarily oil and gas, are considered the «artery» of the economy. No industry or even everyday life can get along without oil and gas, especially products manufactured from them. Due to the increase in their production and processing not only the fuel and energy power of the country is strengthening, but also foreign exchange earnings are retained, and in the conditions of a significant increase in the equipment fleet — further «motorization» of the economy is maintained. In addition, it is particularly important in the context of globalization and the international division of labor that production and processing of hydrocarbons serves as a good and reliable «ground» to strengthen cross-sector, inter-regional and even interstate business relations, including the development of investment cooperation with many oil and gas companies and specific countries, both in the near and far abroad. Uzbekistan adopted and is implementing a state program «On the priorities of industrial development for 2011–2015", which includes more than 500 investment projects with a total estimated cost of almost 50 billion USD. It aims to increase the share of manufacturing industries in the industrial structure from 41.0 % in 2010 to 49.0 % in 2015, as well as to raise the proportion of the entire manufacturing industry in the GDP from 24.0 % to 28.0 % [1].

The development of the fuel and energy complex takes a special place in this program, which is currently led by the aforementioned NHC “Uzbekneftegaz” in the oil sector, and by the State Joint Stock Company (SJC) “Uzbekenergo” in the domain of power industry. Not only construction of new enterprises, including mini-power plants, development of new deposits by expanding exploration, as well as increase of (where possible) debit hydrocarbon production from elder minefields were determined as development priorities of this complex, but also the introduction of innovative and resource-saving technologies, modernization of existing enterprises and plants, and increasing of the output of industry. The expansion of oil and gas pipelines and the sphere of production of oil and gas equipment and services are also among the priorities of development of this complex.

Implementation of these and other measures should help to ensure a reliable and quality satisfaction of the needs for fuel and energy resources, as well as improve the efficiency of their use (consumption), which is called resource conservation or efficient use of resources in practice. The latter has utmost significance in current environment, not only due to the previously mentioned «motorization» of the economy, but also a notable increase in population, which leads, as a rule, to a corresponding increase in demand for energy.

According to current projections, these and other factors will determine the growth of the world demand for hydrocarbons, primarily of oil to 45.0 % by 2025, gas — to about 60.0 % [2]. It seems that this is largely connected to the current trend of investment in the construction of gas pipelines and liquefied natural gas plants.

Uzbekistan, as part of the world community and global international economic and financial market never stood apart from the universal positive processes, and it does not stand apart now either. Therefore, emerging trends on world markets, including the market of energy resources cannot, figuratively speaking, pass by the interests of the republic. Uzbekistan is not only an equal member of the UN, but also an active «player» on many markets, building mutually acceptable and mutually beneficial economic relations with many countries. Today in the republic more than 4 thousand joint ventures and production companies, of which nearly 800 enterprises created with the participation of Russian capital.

Naturally, the oil and gas industry is not standing aloof from this worldwide high road, as well as fuel and energy complex in general. Manufacturing policy carried out in the country, including fuel and energy policies, is an integral part of all social and economic policy. As a result of its implementation, Uzbekistan has achieved not only grain, but also fuel and energy independence. If earlier, i.e. before gaining state and political sovereignty, the country imported more than 10 million tons of oil, not mentioning other types of products of both industrial and household use, today it has the potential to ensure its own oil and other energy resources. More than 60 billion cubic meters of natural gas are produced now from the subsoil, which is almost 1.5 times more than in 1990. During the period from 1990 to 2013 the volume of liquefied gas in the country has increased by more than 15 times.

These achievements have allowed not only to strengthen the productive capacity of the industry, treat more cost-consciously hydrocarbon extraction and use, get rid of the old fuel, and especially oil dependence, but also to transfer the oil and gas complex into the new vector of development. Confirmation of this –Newly built and put into operation enterprises, as well as reconstruction of existing enterprises on a new technical and technological basis serve as a confirmation of this fact. Among those compounds in the first grouping are Bukhara refinery (BNPZ), Shurtan Gas Chemical Complex, and Mubarek compressor station, and the latter are Fergana and Altiarik refineries. Underground and aboveground storages of oil and oil products, as well as other special structures typical for the industry that were built can also be grouped here. Construction of gas and chemical complex facilitated the deepening of the process of natural gas processing, the development of new production and the creation of jobs in related industries. Some types of petroleum products today are not inferior, and in some cases even surpass foreign analogues and compete freely on world markets.

All this, of course, did not come into the economic life of the country overnight or by itself, nor automatically. Industry success is largely connected with, primarily, a properly chosen direction of the industry development and its transition, just like of the whole economy, to a market basis. This is also accompanied by a favorable climate created in the country for investors, especially foreign ones, changing attitudes to the placement and use of natural resources and productive forces as a whole, strengthening the status of the property and others, which in the general can be called a reform strategy of the state.

Sustainable development of the industry, as the economic analysis and observations show, has helped to contribute to the current availability in the country's major natural gas reserves, oil, hydropower and coal. According to experts, the available reserves of oil and gas are equivalent to more than 1 trillion USD [3]. Uzbekistan accounts for nearly 74.0 % of all gas condensate reserves of the Central Asian Region (CAR), 31.0 % of oil, 40.0 % of natural gas, 55.0 % of coal [4]. Uzbekistan is not accidentally currently ranked eighth in the world in terms of gas production and is among the states present at the global energy market.

In accordance with the established structure of management incorporating natural hydrocarbon resources, primarily oil and gas into business turnover is assigned to «Uzbekneftegaz». It is a diversified industrial-economic complex, aimed to perform activities of prospecting, exploration, mining and sales of oil and gas, including processed products. Its functions also include construction of facilities both for production and social use, service facilities and other services.

The NHC «Uzbekneftegaz» is considered the largest oil and gas company in Central Asian Region and one of the main suppliers of hydrocarbons, especially gas to Russia and neighboring CIS countries. According to this oil and gas institution, about 60.0 % of the territory of Uzbekistan has potential for oil and gas. In five oil and gas regions of the country 211 hydrocarbon deposits have already been opened and are being operated, of which 108 deposits belong to the gas and gas condensate, and 103 deposits belong to oil and gas, gas condensate and oil. The scale of proven hydrocarbon reserves, according to estimations, is 3.6 billion tons of oil equivalents in the open fields [5].

As can be seen, the reviewed industry has sufficiently large reserves of natural raw materials. In recent years, the annual volume of hydrocarbons produced is between 80–90 million tons of oil equivalents, 250 thousand tons of liquefied gas and 125 thousand tons of polyethylene. Oil and gas industry provides 96.0 % of all domestic energy needs in primary fuel resources. Export potential of all gas produced in the monetary equivalent makes 1.4 billion U. S. dollars. [6]

Gas from refineries is consumed within the enterprises as a fuel to acquire additives for high-octane gasoline, as well as for the production of petrochemical products. Dry gas is primarily used as energy fuel, and in some areas — liquefied gases. Additives to high-octane gasoline are obtained from butane-butylene and propane-propylene fraction, that is from the most valuable raw material for petrochemical production.

However, many technological processes, as seen from the experience of not only domestic enterprises, have low selectivity in output of main products. This particularly applies to petrochemical processes, the selectivity of which is 35.0–70.0 %. For large scale production, this causes, or at least may lead to significant loss of gasoline, xylene, paraffin, coke, ethylene and other products, and to overrun of expensive scarce raw material. Therefore, increasing the yield of the target product by improving the selectivity of processes is one of the important challenges facing businesses and the industry as a whole. Its successful solution will enable to reduce not only the consumption of raw materials, but also of all products, as well as revenue growth and profitability of production that are in the market conditions and growing competition are important indicators of the survival of enterprises.

The entire horizon of the further development of the industry, unfortunately, is not limited to only solution of this problem. No less important ways of improving the efficiency and competitiveness of the industry at the same time, including the operation of companies in its structure are:

-        Reduction in specific fuel consumption and energy on the basis of the transition to resource-efficient and advanced technologies;

-        Modernization of existing and creation of new fixed assets, facilities and processes as a basis of improving business attractiveness for investors, especially foreign ones, and receiving a high return on investments;

-        The elimination of «narrow» places of production and its transition from intermediate to higher final and lasting results;

-        Minimizing the payback period and the achievement of profitability of production — from upstream to their processing;

-        Ensuring mutual benefit for domestic and foreign investors as a prerequisite for the implementation of investment projects;

-        Improving the organization of production and labor, the use of modern scientific management, fight against all types of losses and wastage.

As noted at the time of classic economic theory, ores, metals, cotton and other objects and means of production without human participation, without the touch of human labor — is essentially «dead» things. Consequently, the implementation of the mentioned tasks, as well as inclusion in the economic turnover of natural resources, the output of the industry to a new level of development and many more depend on human resources, especially on their professional part. According to the President of Uzbekistan Islam Karimov, «no matter what tasks we put forward, no matter what problems we have to solve, ultimately all depends on the personnel and personnel only» [7]. The aforementioned, of course, refers to the oil and gas industry, which today employs a large group of highly skilled professionals. The reaching of new heights in mining as well as in oil and gas processing, including integration into the economy of natural resources and new investment opportunities largely depends precisely on them.


1.      Major trends and indicators of economic and social development of the Republic of Uzbekistan during the years of independence (1990–2010 gg.) and forecast for 2011–2015. Statistical compilation. Tashkent, 2011, p.123.

2.      D. Abutalipov. A new milestone in the development of oil and gas industry. Tashkent, Uzbek Oil and Gas Journal, 2007, № 2, p.4

3.      A. S. Danilov, Z.Yu.Yuldashev. National economy. Textbook. Tashkent, «Yangi Asr Avlodi», 2003, p.147.

4.      I. A. Karimov. Uzbekistan — own model of transition to market relations. Tashkent, «Uzbekistan», 1993, p.31.

5.      E. Mahmudov, D.Abutalipov. New opportunities to improve the investment activity in the oil and gas sector. Tashkent, Uzbek Oil and Gas Journal, 2008, № 1, p.5.

6.      Statistical data of the NHC «Uzbekneftegaz» for 2006–2011.

7.      I. A. Karimov. Uzbekistan looking to the XXI century. Tashkent, 1999, p.17.

Основные термины (генерируются автоматически): NHC, USD, BNPZ, CAR, CIS, GDP, SJC.

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