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RESOLUTION OF THE PRESIDENT OF THE REPUBLIC OF UZBEKISTAN

of July 9, 2019 No. PP-4388

About measures for stable providing economy and the population with energy resources, financial improvement in enhancement of management system oil and gas industry

In recent years consecutive work on complex development of fuel and energy industry and diversification of the power sources which are important factor of ensuring more and more increasing need for energy resources is carried out.

At the same time inefficiency of conducting exploration works, implementation of investment projects and pricing resulted in incomplete security of economy and the population of the republic with energy resources, deterioration in financial position of the companies of oil and gas industry.

So, in case of increase in natural gas production for the last 20 years for 8 percent the amount of its production by domestic enterprises decreased by 29 percent, the confirmed inventories of natural gas in 2008 - 2018 were reduced by 4 percent, the average value of substitution of natural reserves of natural gas for the expired 5 years constituted about 70 percent.

As a result of insufficiency of financial resources and deficit of material resources in 2017-2018 the surplus of natural gas production is provided only for 42 percent from forecast indicators.

The obsolete and opaque management system combining in itself regulatory functions and business activity interferes with implementation at the companies of oil and gas industry of modern management, to increase in their financial stability and profitability.

For the purpose of complete satisfaction of requirement of economy and the population of the republic in energy resources, ensuring financial improvement of the companies of oil and gas industry, creating favorable conditions for development of healthy competition, implementation of modern digital technologies and advanced methods of management on the basis of the commonly accepted international practice:

1. Take into consideration that together with the international consulting companies and the international financial institutions the Concept of development of oil and gas industry of the Republic of Uzbekistan till 2030 is developed.

2. Form the Republican working commission on implementation of the Concept of development of oil and gas industry of the Republic of Uzbekistan till 2030 (further - the Republican working commission) in structure according to appendix No. 1.

Republican working commission (A. N. Aripov) in a month:

a) taking into account the performed reforms to approve "road maps" on implementation of the Concept of development of oil and gas industry of the Republic of Uzbekistan till 2030, having paid special attention on:

growth in volumes of production of hydrocarbonic raw materials;

upgrade of gas-transport system;

enhancement of accounting and control of production, conversion, transportation and realization of natural gas;

critical studying and optimization of investment projects, and also enhancement of mechanisms of their realization;

strengthening of financial discipline and enhancement of pricing at the companies of oil and gas industry;

b) approve the lists of workers of the commissions on each direction of the Concept of development of oil and gas industry of the Republic of Uzbekistan till 2030;

c) take measures for involvement of the international financial institutions, foreign government financial institutions (further - MFI/IPFO) and the consulting companies to practical implementation of the Concept of development of oil and gas industry of the Republic of Uzbekistan till 2030 together with the created working commissions;

d) provide creation in the Department of Energy of project office on coordination of reforming of oil and gas industry with the extreme number of staff of the managerial personnel in quantity to 20 units financed by means of off-budget fund of development of fuel and energy industry in case of the Department of Energy of the Republic of Uzbekistan, means of technical assistance (grants) of MFI/IPFO.

3. Agree with offers of the Department of Energy, Agency on management of the state assets, the Antimonopoly Committee, the Ministry of Economy and Industry, the Ministry of Finance of the Republic of Uzbekistan on enhancement of management system and forming of effective organizational structure of JSC Uzbekneftegaz prepared with technical assistance of Asian Development Bank, providing:

reducing excessive intermediate links in management system of JSC Uzbekneftegaz by accession to it of JSC Uzburneftegaz, JSC Uzneftegazdobycha, JSC Uznefteprodukt, JSC Uzneftegazmash with education in structure of executive office of JSC Uzbekneftegaz of the relevant divisions providing accomplishment of tasks and functions of the abolished links;

conclusion of JSC Uztransgaz from structure of JSC Uzbekneftegaz and transfer to the Agency on management of the state assets of the Republic of Uzbekistan (further - the Agency) shares of JSC Uzbekneftegaz in the authorized capital of JSC Uztransgaz;

creation of JSC Hududgaztajminot based on territorial branches of gas supply of JSC Uztransgaz with determination of the Agency by its shareholder.

4. Assign on:

a) JSC Uztransgaz of function on:

to acquisition of natural gas at the organizations for production and conversion of gas, including the joint businesses and the foreign companies working at the basis of production sharing agreements for its further transportation, including export and natural gas import, as the single operator;

realization of natural gas under direct agreements to the consumers connected to trunk gas pipelines and also under commission agreements with JSC Hududgaztajminot for the consumers connected to gas distribution networks;

b) JSC Hududgaztajminot of function on:

operation of gas distribution networks and the accompanying equipment with observance of normative requirements of rules of safe operation;

to purchase, delivery, storage and realization of the liquefied gas to the population and objects of the social sphere.

5. Transform the gas and oil producing and gas-processing organizations to structural divisions (management, the plant) of JSC Uzbekneftegaz without formation of legal entity according to appendix No. 2 for the purpose of establishment of direct control of production divisions.

6. Reorganize the separate organizations by their accession to JSC Uzbekneftegaz and the organizations which are its part according to appendix No. 3.

7. Accept offers of the Department of Energy, the Agency, the Antimonopoly Committee, the Ministry of Economy and Industry of the Republic of Uzbekistan about:

realization to subjects of entrepreneurship through biddings of 1 381 unit of gas stations of JSC Uznefteprodukt on servicing of farms with implementation of alternative system of ensuring availability of combustible lubricants in remote and hardly accessible settlements;

to step-by-step transfer to management to private operators of the gas supply facilities assigned to regional, interdistrict (city) branches on gas supply or their sites for implementation of functions on operation of gas distribution networks and the accompanying equipment, and also sale of natural gas to consumers on the terms of public-private partnership;

realization of non-core assets of JSC Uzbekneftegaz and the companies which are its part, including provided to realization according to earlier made government decisions by application of step-by-step decrease in the starting price in the absence of applicants within a month from the moment of exposure to the biddings;

to transfer to local executive bodies of shares of the organizations entering into structure of JSC Uzbekneftegaz in the authorized capital of the markets, trade and livestock complexes according to appendix No. 4;

to transfer of shares of JSC Uzbekneftegaz to the Agency and the organizations which are its part in the authorized capital of service and other organizations according to appendix No. 5;

implementation at all stages of production, conversion, transportation, transfer and realization of natural gas and liquid hydrocarbons of their separate accounting using electronic metering devices of resources;

to transfer to the State committee of the Republic of Uzbekistan on geology and mineral resources of functions on the advancing development and reproduction of inventories of hydrocarbonic raw materials of the republic, increase in efficiency and effectiveness of the exploration works aimed at providing opening of new fields of hydrocarbonic raw materials, stock gain.

8. Determine at the present stage the major task:

a) JSC Uzbekneftegaz - growth in volumes of production of hydrocarbonic raw materials, including natural gas - to 42,3 of one billion CBM and the liquefied gas - to 1, one million tons in 2024, the providing complete requirements satisfaction of industries of economy and the population, and also profitability of the company, including for the account:

involvement of large world oil and gas companies to production of hydrocarbonic raw materials on fields with hardly removable inventories on the basis of widespread in foreign practice conditions and mechanisms of attachments of investments;

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