Tashkent, Uzbekistan (UzDaily.com) -- At a meeting with a group of journalists and bloggers, Minister of Energy of Uzbekistan Jurabek Mirzamakhmudov, using the example of Lukoil, explained how the production sharing agreement (PSA) concluded with foreign companies works. So, when concluding an agreement with any company, Uzbekistan receives at least 50% of the income, without spending money on the development of the field. Some factors may further increase the share of Uzbekistan.

Let us consider the mechanism of such agreements on the example of the 25 Years of Independence field, which was transferred to foreign companies for 35 years. It should be noted that the contract for the field was signed in 2017. It will take at least 8 years for this field to work.

The Government of Uzbekistan signed an agreement for the development of the M-25 field with a consortium of 3 companies: Gas Project Development Central Asia AG (Switzerland), Altmax Nolding Ltd (Cyprus), Uzneftegazdobycha JSC (Uzbekistan). The share of investments of Altmax Holding is 75%, Uzneftegazdobycha - 20%, Gas Project Development Central Asia - 5%.

Among those who have read this information, there will certainly be those who will ask themselves the question: “Listen, the share of Uzbekistan is 20%, why then are we talking about 50%?”. Let’s try to explain in an accessible language.

According to the agreement, when gas production begins at the field, 50% of the income (excluding all expenses and taxes paid to Uzbekistan) will be distributed in favor of the Republic of Uzbekistan, and the remaining 50% among investors.

Let’s say a deposit generates US$100 million in revenue. It is divided equally - US$50 million will belong to Uzbekistan, and the remaining US$50 million - to investors. After that, the income of investors, that is, 50 million dollars, will be divided between them. And then Uzneftegazdobycha, which belongs to Uzbekistan, will receive 20% of the amount due to investors, that is, US$10 million.

Thus, the income from the field will be distributed as a percentage of “60 to 40” in favor of Uzbekistan.

According to the terms of the agreement, a gas chemical complex will be built on the territory of the field.

The nominal capacity of the project is the extraction and processing of 5 billion cubic meters of sour gas per year. 1000 new jobs will be created.

To date, within the framework of geological exploration at the field, seismic surveys have been carried out using the 3D (160 sq. km) and 2D (492 linear km) methods, 16 wells have been drilled and test work has been completed in 5 wells, drilling is currently underway in 2 wells. 3 more wells are under testing.

After the 35-year period specified in the contract, the constructed plant, infrastructure and equipment will become the property of Uzbekistan. Income from the sale of gas will also be fully transferred to the budget of Uzbekistan.