Malaysia's state-owned Petronas oil and gas company will jettison all its hydrocarbon investments in Uzbekistan this year, a company representative has said. Meanwhile, a small company registered in an offshore tax haven is eager to ramp up its exploration projects in the Central Asian country.
"This decision by Petronas is final. The Uzbek government is now preparing documents that will make it possible to legally complete the process of exiting from upstream projects," an anonymous source at the company told Russia's RIA Novosti news agency on May 24. The move is in line with "the company's general strategy to optimize its activities in the region."
The source said that Petronas had already stepped away from production-sharing agreements on two projects: a gas condensate field on the Ustyurt Plateau adjacent to the Aral Sea and the Boysun oil and gas field in the Uzbekistan's south. These PSAs were signed between 2008 and 2010, RIA Novosti said.
It is unclear exactly why Petronas is bowing out. Large foreign investors in Uzbekistan have been known to face harassment from excessively attentive officials looking for kickbacks. But the company has been scaling back operations in Uzbekistan for some months, declaring in April that one project turned out to be commercially unfeasible. Overall oil and gas production in the country has fallen in recent years.
The gap left by Petronas will not remain vacant for long, however: Cayman Islands-registered Tethys Petroleum has announced that it has signed a Protocol of Intent (POI) with state-run oil and gas company Uzbekneftegaz to explore in the Bayterek block in the North Ustyurt Basin, not far from one of the fields Petronas is ditching.
Tethys and Uzbekneftegaz intend to explore jointly after Tashkent approves their program, which Tethys expects "within one calendar year," the company said in a May 16 statement.
Tethys boss David Robson said the POI is “a significant step forward” for the partnership. “[W]e look forward to using our working knowledge of the area to best exploit this attractive block."
Notoriously press-shy Tethys is also involved in prospecting for gas in Uzbekistan's archrival, Tajikistan, where last year it boasted of a find with “super-giant potential.” Tashkent and Dushanbe are at loggerheads over upstream Dushanbe’s plans to build what would be the world's tallest hydropower dam, Rogun. Tashkent regularly imposes transport blockades and cuts gas deliveries to bully its neighbor. It’ll be interesting to see how Tethys manages that delicate relationship.