GAIL in talks with Uzbekistan for gas

After firming up a city gas distribution joint venture with Chinese company China Gas earlier this year, GAIL (India), the country's largest transporter and marketer of natural gas, is in talks with Uzbekistan's national petroleum holding company Uzbekneftegaz for setting up a joint venture company to supply gas to households and vehicles in Uzbek cities.

"We are looking at various business opportunities in Uzbekistan which include city gas distribution and exploration businesses. We are seeking more information from them, after which we will start with our due diligence process," said GAIL Director (Business Development) AK Purwaha.

Another GAIL official, who did not want to be named, said that a company delegation would visit Tashkent in August this year to take the talks to a conclusion. Uzbekneftegaz has already got all clearances for a joint venture, the official added.

The Indian gas company is also likely to be awarded exploration and production blocks in Uzbekistan. "We have shown interest in four blocks and data related to these four blocks are also likely to given to us during the August visit," the official said.

GAIL is likely to tie-up with Uztransgaz, a fully owned subsidiary of Uzbekneftgaz engaged in the gas marketing and transportation, for distributing compressed natural city to vehicles and piped gas to households in Tashkent, Samarkand and Bukhara, three of the biggest cities in Uzbekistan.

A government-owned company, GAIL has shown interest in entering the city gas projects in various countries in west Asia and Africa. The company, through joint venture companies Indraprashtha Gas and Mahanagar Gas, distribute gas to retail customers in Delhi and Mumbai.

GAIL and Uzbekneftegaz had entered into an agreement in April 2006 for co-operation in the energy sector. The two companies had agreed to co-operate in exploration and production, gas processing and LPG, production of petrochemicals as well as training or personnel.

GAIL plans to set up an LPG plant in the western parts of Uzbekistan along with Uzbekneftegaz. The plant will produce LPG predominantly for consumption in the domestic market of Uzbekistan.

GAIL is also likely to set up of ethane-propane extraction unit in Uzbekistan and construct of 60-km gas transportation pipeline in Uzbekistan.

Uzbekistan is estimated to have 594 million barrels of proven oil reserves. It is also the second largest gas producer in the erstwhile Soviet Republics and one of the top 10 natural gas producing countries in the world.

Uzbekistan had in 1998 consolidated all its petroleum business under a single holding company Uzbekneftgaz. All other state-owned petroleum companies are subsidiaries of the holding company.