TASHKENT

Uzbekistan’s state-owned oil and gas company Uzbekneftegaz will issue an international bond worth up to $700 million this month to diversify foreign financial sources and transform the country’s energy system.

According to a resolution issued by the Uzbek government, Bank GPB International, Citigroup, J.P. Morgan, and MUFG were selected to arrange the bond placement on the London Stock Exchange in November.

On November 4, Fitch Ratings has assigned a ‘BB-(EXP)’ expected senior unsecured rating to U.S. dollar-denominated notes to be issued by Uzbekneftegaz.

“The prospective notes will be issued directly by UNG (Uzbekneftegaz), which generates most of the consolidated group’s EBITDA. Proceeds will be used for debt repayment and general purposes. The final bond rating is contingent upon the receipt of final documentation materially conforming to information already received,” Fitch said.

Last month, Uzbekneftega inked financial support agreements with Deutsche Bank, Landesbank Baden-Württemberg, and Landesbank Hessen-Thüringen Girozentrale (Helaba) to expand production capacity of the Shurtan Gas Chemical Complex.

The cooperation agreements envisage the allocation of 1.1 billion euros of capital to finance the expansion of the Shurtan Gas Chemical Complex’s (“Shurtan GCC Upgrade Project”) production capacity. The agreements were signed with Deutsche Bank – for 500 million euros, Landesbank Baden-Württemberg – for 300 million euros and Landesbank Hessen-Thüringen Girozentrale (Helaba) – also for 300 million euros.

The total cost of the Shurtan Gas Chemical Complex project is $1.8 billion, of which $1.2 billion will be contributed by a consortium of foreign banks and financial institutions and $600 million – from Uzbekneftegaz.

The Central Asian nation of 35 million unveiled an ambitious economic reform programme five years ago, since Shavkat Mirziyoyev became president. He opened up the country to foreign trade and investment and scrapped monetary and other administrative burdens for business.

Mirziyoyev also prioritised reforming the energy system by opening up it to foreign investors offering public-private partnership in the power sector and promised to create all necessary conditions by 2025 so that private investors would be able to produce up to 50 percent of the country’s electricity.

Uzbekistan produces about 60 billion cubic metres of gas per year, exporting some of its output by pipeline to China, Russia and neighbouring countries.

However, Uzbekistan’s leadership has recently said the country might change its gas exporter status to importer due to growing domestic demand and using gas as a raw commodity to produce value-added goods for export.