ARAL SEA OPERATING COMPANY

The Aral Sea Operating Company was set up in 2006 to explore and develop Uzbekistan’s oil and gas fields in the Aral Sea on a Product Sharing Agreement basis.

The JV "Aral Sea Operating Company" LLC being established by Consortium of Investors in accordance with Decree of President of Republic of Uzbekistan "On the conduction of geological studies of Uzbekistan part of Aral Sea with further development of newly discovered deposits of hydrocarbons based on the terms of Production Sharing Agreement PSA)for the Uzbekistan part of Aral Sea between Republic of Uzbekistan and Consortium of Investors signed on 30.08.2006.

On the 21.02.2007 the JV "Aral Sea Operating Company" LLC was registered by the Ministry of Finance as a Legal entity. Initial investors in the PSA were the National Holding Company "Uzbekneftegaz"(Uzbekistan), "LUKOIL Overseas Aral Ltd." (Russia), KNOC Aral Ltd. (Korea) and CNPC Internation Ltd. (China) and Petronas Company of Malaysia (whose share now been sold to Lukoil O.A. Ltd)

The Eastern Ustyurt, located between the Emba, South Mangishlak, Bukhoro, Khiva oil and gas regions has long been considered (since Soviet times) as a highly promising area for oil and gas production.

The Ustyurt Plateau, including the Aral Sea, and adjacent Karakum and Kizilkum deserts, during the Jurassic period were a vast water body that stretched from the Caucasus in the west to the Tian Shan in the east. In this time hydrocarbons were layed down.

In recent years Uzbekistan has explored for oil and gas in the area; Geologicists and geophysicists who have undertaken geological mapping, seismic work and drilled a number of deep boreholes to confirm these deposits. Four promising fields in the Jurassic era deposits : West Aral, Umid, Aktepa and Shagala have been identified. Also since 2007, the waters of Aral Sea have been explored by 2D seismic surveys using modern geophysical equipment.

Nodir Mukhitdinov, deputy director of the Oil and Gas Geology and Exploration Institute "Currently, the geological study of the Uzbek part of Aral Sea area is conducted in accordance with the decree of the president of the Republic of Uzbekistan ‘On the geological study of the Uzbek part of Aral Sea and the subsequent development of newly discovered fields in terms of the Product Sharing Agreement’"

(As of Aug, 2013)

Uzbekistan has granted a consortium of investors from five major companies : Uzbekneftegaz (Uzbekistan) Petronas Carigali (Malaysia), CNPC (China), KNOS (Korea) and Lukoil (Russia) to undertake a geological study of the Uzbek part of Aral Sea and the subsequent development of newly discovered fields in terms of the Product Sharing Agreement.

The consortium have chosen the Western Aral as the most promising area to start. As a result of drilling and testing of the Jurassic deposits in this field they have found a commercial influx of gas and condensate, and have opened a new gas condensate field. This has proved high potential of the Uzbek part of Aral Sea area in the discovery of new reserves of hydrocarbons and confirmed the forecasts of Uzbek geologists.

In 2010 further exploration wells are being undertaken in the Shagala area. And currently investors are considering options of drilling new exploration wells in Aktepa and Umid, as well as accelerating the exploration for deposits in western Aral Sea with the options of natural gas production.

Some experts believe that if the project is implemented successfully, the Aral sector of Uzbekistan may become more attractive for investors than the Caspian oil and gas fields of Kazakhstan. Uzbekistan’s sector in the Aral Sea has been estimated to hold around 31 percent of the oil and 40 percent of the natural gas reserves of Central Asia, which potentially would make Uzbekistan the second largest oil producer in the region, rivaling Kazakhstan. Uzbekistan is steadily increasing its export volumes of gas. In 2010, the volume of gas exported from Uzbekistan to Russia exceeded that of Turkmenistan to Russia and equaled 15.5 billion cubic meters (bcm), compared to 10.5 bcm in the preceding year and by 2012 this should rise to 14.5 bcm of gas. Southern Kazakhstan is largely dependent on Turkmen and Uzbek gas supplies. Further Uzbekistan is soon scheduled to start gas exports to China through the gas pipeline from Turkmenistan to China, the 529-km Uzbek section of which is planned to be completed by 2014.

Source:http://www.linkedin.com/companies/aral-sea-operating-company-llc April 2010 and Uzbekistan Today (Edited) July 16, 2010 and www.infoshos.ru, November 11, 2009.