UZBEKNEFTEGAZ NATIONAL HOLDING COMPANY UZNEFTEGAZDOBYCHA JOINT STOCK COMPANY Implementation of flare gas utilization projects at Kashkadarya Region’s deposits Mr. ALIMAKHMUD KARIMOV Deputy Director General Regional Conference for Europe and Central Asia Uzbekistan’s experience in utilization of associated gas and CDM projects implementation in oil sector, Tashkent, 14-16 June 2012

Due to positive global trends in fossil hydrocarbons consumption as well as to worsening global and regional environmental situation, the issue of associated gas flaring at the oilfields becomes a problem requiring immediate solutions. The Republic of Uzbekistan, being a member to Kyoto Agreements, actively implements measures aimed at reducing industrial emissions to the atmosphere

According to some preliminary estimates, about 1. 2-1 According to some preliminary estimates, about 1.2-1.5 bln m3 is flared at Uzneftegazdobycha JSC’s (Uzbekneftegaz NHC) oilfields per year. Flare gases contain up to 3.5% propane and butane fractions and up to 2% liquid hydrocarbons. In order to stop further losses of associated gas, we are considering and applying gas compression technologies extracting liquid hydrocarbons at existing gas processing plants before it is fed into the gas transport system.

At present, the Company has achieved certain results in utilization of associated gas and brake-through gases at oil and gas condensate fields of Bukhara-Khiva Region: Associated gases at Kokdumalak oil fields are utilized using compressor method. The volume of gas utilized is at 11.5 mln m3 per day About 850 thousand m3 of the gas from oil wells is utilised at Northern Shurtan and Shakarbulak deposits thanks to modified development schemes and the use of new process equipment

CBS at Kokdumalak JV

A programme for comprehensive utilisation of breakthrough and associated gases at the Company’s oilfields has been developed and is being implemented in partnership with GGFR. Specialists from “Carbon Limits” company have undertaken preliminary work to establish exploitability of the facilities. Based on the recommendations received from GGFR, preparation of a joint CDM project “Utilization of associated gas at Southern Kemachi, Umid, Kruk, Western Kruk, Northern Urtabulak has started together with Macquarie Bank Limited

Implementation of this project will allow to: reduce the volume of low pressure associated gas by about 800 bln m3 per year substantially improve environmental situation in the region produce additional volumes of natural gas and gas condensate;

Estimated annual utilization of associated gas at Southern Kemachi group of oil fields млн. м3

As a result of preliminary assessment done by the GGFR’s consultants, the following is the list of other projects marked as prospective for implementation at later stages: “Utilisation of associated oil gases at Northern Shurtan, Garmiston, Kumchuk, Shakarbulak deposits and Shurtan head works” (forecasted utilization of 690 mln m3 per year. Utilization of process gases at Mubarek GPP (forecasted utilization of over 700 mln m3 of acidic gases per year Utilization of associated gas at Arniyoz, Zervardy, Sardob, Jeynov group of oilfields (forecasted utilization of 200-250 mln m3 of associated gas per year)

The bulk of associated gas shall be utilized in the near future, and the Company will face an issue of the volume of flared gas being small (up to 100 thousand m3 per day) and of locations being far from the established infrastructure Uzneftegazdobycha JSC, as a structural subdivision of Uzbekneftegaz NHC, highly values partnership with GGFR and hopes for further fruitful cooperation aimed at achieving new results in reducing and possibly eliminating flaring of associated gas.

THANK YOU FOR YOUR ATTENTION!