Uzbekistan's First Energy Minister Alisher Sultanov is spearheading market reforms aimed at overhauling how energy is consumed in the nation, educating the population on the true value of natural gas and reducing or eliminating the country’s dependence on oil imports.

Sultanov, 51, was appointed to the post in October 2018 after Uzbek President Shavkat Mirziyoyev ordered the creation of an Energy Ministry.

Before his nomination, Sultanov served as chairman of state-owned Uzbekneftegaz, a large holding conglomerate that essentially monopolised hydrocarbon production, transportation, refining and distribution.

However, the whole set-up of Uzbekistan's energy industry is due to change over the next few years.

Authorities want to deregulate the gas energy market, split Uzbekneftegaz into various independent units, attract billions of dollars of international investment and privatise gas distribution networks and refineries.

Sultanov is optimistic about the adminstration's ability to deal with the challenges posed by such ambitious reforms.

The effort will also call for consumers to use natural gas more efficiently.

“People in the country should learn to see the value in what they have got,” says Sultanov, referring to the gas that is sold to households and farms at UZS 320 (US $0.38) per cubic metre today.

“They should stop open flaring of gas to heat their greenhouses, or opening windows at their homes in winter if it gets too hot inside.”

Authorities in the capital Tashkent have already set out plans for a gradual growth in the domestic gas price until it reaches parity with the export price.

The policy aims to encourage more efficient use of natural gas and a switch to other energy sources such as coal, which is abundant in Uzbekistan, he says.

Initially, more efficient use of gas in households, farming and the production of construction materials is expected to free between 1 billion and 1.5 billion cubic metres of gas annually that can be processed into higher-value polymers, according to Sultanov.

The reforms are part of a wider effort to bring change to Uzbek society.

“Reforms should change the mindset of Uzbekistan's population, teach them how to plan and save,” he says.

This is essential to smooth the transition from the heavily state-regulated system to a market economy — and, authorities hope, it could help avoid potential social unrest.

“In the last two-and-a-half years, we have opened up new opportunities for the population to work and earn more,” Sultanov says.

Self-sufficiency

Sultanov is also very enthusiastic about the efforts of Uzbekistan to achieve energy self-sufficiency, despite the high investment required.

One immediate step that authorities think will help push the effort along is the $3.6 billion gas-to-liquids plant being built close to the Shurtanskoye field, currently the country's largest gas producer, located in the Kashkadarya region close to Turkmenistan.

The GTL plant will convert excess gas into fuels and thus enable Uzbekistan to reduce oil imports, Sultanov says.

Meanwhile, the Energy Ministry and Uzbekneftegaz have spent the past year engaging with experienced foreign partners about rehabilitating mature oilfields to help reverse anticipated declines in the country’s oil production, with the goal of reducing or eliminating the need for imported oil.

As with many Uzbek government officials, apparently including President Mirziyoyev, Sultanov ardently believes Uzbekistan's gas is best put to use as a polymer feedstock, and not as fuel.

He speaks with pride about the 15 years of his career spent at the Shurtan gas chemical facility, a major Uzbek institution that converts some of the country's produced gas into polypropylene, which is sold domestically and also exported.

Expansion

The Energy Ministry and Uzbekneftegaz have agreed to pay more than $1.3 billion to the country’s leading building contractor, Enter Engineering, to expand the existing facility with the aim of more than tripling its output. An estimated $3.5 billion is also expected to be spent on a methanol-to-olefins facility to be built in partnership with US company Air Products.

The plant will use about 1.5 Bcm of gas annually to produce close to 600,000 tonnes of various polymers.

Sultanov says these three expensive projects have been audited by international consultants and banks, and that he is confident that they will produce positive returns — in both financial and social terms for the country.

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Sultanov pushes for reform in Uzbekistan