January 29, 2014
Elevated Relations
Russia has always been a special partner for Uzbekistan. Parameters of the close economic relations and confidence lie not only in the fact that that country is the foremost trading partner of our nation, but also in the variety of industrial, commercial, logistics and many other chains that bind the two lands.

Bright indicator of the effective bilateral cooperation is the increase in turnover despite the crisis in the global economy. In 2012, the two countries increased mutual trade by 12%, bringing it to $7.6 billion.

The results of last year will be announced soon, but none of the experts has doubt that Russia will remain the first trade partner of Uzbekistan, and the relationship will show again a good momentum. What is the secret of such a successful interaction? Let\'s deal. On the one hand there is oil and gas sector that dominates in the relations of the two states. The largest Russian oil and gas giants Gazprom and Lukoil are actively exploring the bowels of Uzbekistan. According to Forbes’s recently published ranking of the 25 largest oil and gas companies in the world this companies occupy the 2d and 19th place respectively. This fact proves the attractiveness of the Uzbek market and investment climate in our country, because even the most successful companies of the world are willing to work here and want to invest heavily not just in exploration and mining, but also in deep processing.

Russian gas giant concentrated last year on its central project – the development of Shakhpakhty field located in the northwest of Uzbekistan in Kungrad district of Karakalpakstan. As representatives of Gazprom reported, in 2013 there were produced more than 315 million cubic meters of natural gas, which is approximately 7 million more than the design level and 5% more than the last year\'s figures. During the 2013 specialists renovated seven wells and commissioned four new ones, bringing the current number of wells operated in the field to 20. The average daily gas production from the field reached 940 thousand cubic meters.

Another big player on the market is Lukoil. This company has even more ambitious plans. The Company conducts exploration activities in the Uzbek part of the Aral Sea in conjunction with Uzbekneftegaz and Chinese CNPC International Ltd. Exploration works on the sites of Hauzak, Shady, Kungrad and Kandim group of fields were done according to the Production Sharing Agreement. 18.5 billion cubic meters of gas were produced there. 368.5 thousand tons of oil and 2 billion cubic meters of natural gas have already been extracted in the fields of Gissar region.

The most important project of this company in Uzbekistan is the development of Kandim group of fields and preparation of a consortium to build a modern gas plant. Commissioning of the first phase of Kandim GPP is scheduled on October 1, 2016. The Korean Hyundai Engineering prepares the project feasibility study and documentation for the project. The contract price was $238 million. In general, the direct investments in the oil and gas sector of Uzbekistan exceeds $3.2 billion, and for the first 9 months of last year accounted to $500 million.

Moreover, Lukoil actively works upon solar energy projects. Back in 2012 there were proposals to construct 100 megawatts solar power plant in Navoi worth nearly 250 million euros. The company also develops partnership with the automotive industry of Uzbekistan. It signed an MOU with Uzavtosanoat under which Russian experts provide consulting support for the construction of new plant in Uzbekistan that will produce packaging items, lubricants and technical fluids.

Speaking generally about the domestic auto industry, this industrial sector of Uzbekistan is not inferior to the world\'s leading manufacturers whose cars are presented in Russia’s automobile market. Of course, experts say that sale of Uzbek cars in Russia has slightly declined; however, this trend is not about the loss of trust and interest to Uzbek cars, but rather about the crisis of the entire car market in Russia and Europe. According to the Committee of Automobile Manufacturers of the Association of European Business (AEB) the passenger cars’ market in Russia decreased by 5% last year. This means that competition for customers will only grow; our auto industry has several good models to answer to its opponents. AEB’s experts say that last year GM Uzbekistan was ranked the 14th in the list of the best car companies in sales, surpassing the famous German concerns Mercedes-Benz, BMW, Audi and Japanese Mazda and Honda. Another growing segment of the economy is mobile market. Unitel company which is the subsidiary company of the Russian mobile operator VimpelCom Ltd operating under the brand name Beeline leads the market in Uzbekistan. In the third quarter of 2013 the number of company’s users exceeded 10 million people.

The agricultural sector plays a special place in the bilateral relations. Uzbekistan traditionally exports a significant portion of its agricultural products, especially fruits and vegetables, to Russia. The Chamber of Commerce of the Saratov region and Novosibirsk City Chamber are going to implement a pilot project for the supply of fresh vegetables from Uzbekistan to their regions. If the project will be successful, it will be extended to other regions of Russia too.

Russian companies are also actively involved in the modernization of the leading industries of Uzbekistan. For example, Western Ural Machine Building Concern from the city of Perm modernizes the Dehqonobod Potash Fertilizer Plant. This Russian company constructs the first 35 km long cargo ropeway in Uzbekistan. Olmaliq Mining and Metallurgical Combine has signed a $73.9 million agreement with the Russian company Tyajmash (Heavy Machines), last year, to develop documentation and technological regulations, as well as equipment supply, installation and commissioning of works related to the project of reconstruction of the crushing-milling and copper concentrator shops. All works are expected to be completed this year.

All this is only a small part of the vast trade and economic cooperation between Uzbekistan and Russia. Experts say that the current state of economic relations between the two countries is in positive dynamics, and that there are many big and profitable projects for the future. The two countries are united with common goal – to be prosperous basing on a mutually beneficial partnership and taking into account the interests of each other.

(Source: “Uzbekistan Today” newspaper)


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