LUKoil Overseas, the operator of LUKoil’s projects abroad, has set up a new company as part of the Kandym-Khausak-Shady-Kungrad project in Uzbekistan, LUKoil Overseas said in a press release.

The new company, LUKOIL Overseas Supply & Trading Ltd., will be engaged in selling project production (natural gas, sulfur, wide fraction of light hydrocarbons, oil, gas condensate and refined product).

The company will conduct market research and negotiate with potential buyers, conclude and execute sales agreements, manage bank accounts, financial and goods flows, and apportion revenue to participants in the production-sharing agreement.

The company has opened a representative office in Tashkent, which has begun agreeing and concluding and agreement on transportation, refining, storage, shipping and sale of product. The first sales are expected at the end of the current year with the start to production at the Khausak gas block in Bukhara region.

All of the gas produced will be exported on Gazprom pipelines. Initial production volume is targeted at three billion cubic metres a year. Once the Kandym gas chemical complex begins operations in 2012-2013, natural gas exports will rise to 12 billion cubic metres a year.

In the initial project stages, oil and gas condensate will be sold domestically. The mid-term outlook is for the company to refine the oil and condensate on a processing basis at Uzbek refineries, for domestic sale and export, the press release said.

LUKoil and Uzbekneftegaz signed the 35-year production-sharing agreement on Kandym in 2004. A consortium of LUKoil Overseas (90 percent) and Uzbekneftegaz (10 percent) is carrying out the project. Confirmed geological reserves of natural gas in the contract territory amount to 329 billion cubic metres. The project is expected to produce a cumulative total of 207 billion cubic metres of gas over its lifetime.