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Business news, 27.01.2006 14:37

Russia and Uzbekistan sign $1.5bn gas deals

gasprom Uzbekistan and Russia’s gas monopoly Gazprom signed two deals on Wednesday to develop gas fields worth around $1.5bn in the Central Asian state.

The deal will allow Gazprom, the world’s largest gas producer, to further strengthen its position in Central Asia, keep the region’s gas exports under control and delay costly development of Russia’s Arctic fields.

Press reports have said Uzbekistan has agreed to give Gazprom a large chunk of its gas industry in exchange for Moscow’s political protection of Uzbek President Islam Karimov, who is severely criticised by the West.

“Developing deposits in Central Asia is often more profitable than in remote regions of our country,” Gazprom chief executive Alexei Miller told reporters.

“We hope to discover new fields there,” he added.

The agreements include a document on key development principles for the Ustyurt plateau in western Uzbekistan, although the two sides have again delayed a final production sharing deal (PSA). The final 25-year $1bn PSA may be signed in the first half of 2006.

A second deal is also a preliminary agreement on geological exploration in seven other gas blocks in the same area. Gazprom will have pre-emptive rights to sign new PSAs if it discovers new reserves in the area. Miller said all gas produced from new fields would be exported via Gazprom, which supplies one quarter of Europe’s gas needs.

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