Leading Uzbek Oil and Gas Company Saneg Issues 2022 Operational Update
Improvement across most operational KPIs, growth in hydrocarbon production, further diversification of order book, improvement of repairs, modernization, and maintenance.
Sanoat Energetika Guruhi (“Saneg”), Uzbekistan’s largest private oil and gas company, issues an operational update for the year 2022.
Highlights
- Total oil production up 9% year-on-year, to 545,440 tons
- Average daily production of hydrocarbons has reached 1,494 tons – more than 9.3% increase y-on-y;
- 16 wells commenced production following successful development drilling;
- 59 wells - previously considered uneconomic - have recommenced production through the implementation of modern advanced technology;
- New offtake contracts signed with buyers domestically, in Europe and Central Asia;
- Orderbook further diversified: across diesel fuel, gasoline and aviation kerosene
- Increased capital investment and repairs of fixed assets:
- 165 facilities repaired with an investment of 51.9 billion soums (USD 4.6 million at the current rate)
- 896,981 billion soums (USD 78.9 million) was invested in 162 new field facilities
- Digitization strategy implemented across the company to reduce manual operations, increase overall efficiency, including the reliability of oil production. The next stage of implementation of SAP S/4 HANA ERP at Fergana oil refinery was completed.
Shokir Fayzullaev, General Director of the company, said:
“Last year, oil and gas company Saneg completed the process of creating a vertically integrated oil and gas company, which included the integration of the Fergana Oil Refinery into our production chain, and the diversification of the sales operations. This enabled us to continue providing the growing economy of Uzbekistan with high-quality and affordable refined oil products. We were successful in growing production by over 9%, while all oil and gas fields transferred to the management of Saneg are at the last stage of the life cycle, that is, the fourth stage of operation, and the natural rate of production decline is against us. This year, we intend to increase internal efficiency, oil production, as well as the workload of the FOR further.”
Production
Saneg produced 545,440 tons of oil in 2022, 9.3% more than the previous year.
The main drivers of increased oil production were the commissioning of 16 new wells from drilling to commercial operation, as well as geological and technical measures executed at 248 wells from Andijan to Ustyurt, which included sidetracking, changing production technology, switching to modern mechanised methods of production, as well as the use of field chemicals. In addition, works at Chegara (oil output grew 9 times), Sardob (output grew 15 times), Yangi Karatepa (38 times), Northern Urtabulak, Sharkiy, Garbiy Toshli and Khodjaobad fields also yielded results.
In 2022 the company also increased its average daily production to 1,494 tons or 9.3% over the previous year. In 2022, 59 wells, previously considered uneconomic, have recommenced production compared with 29 wells the previous year.
Offtake agreements and order book
In 2022 the company’s order book was further diversified. In total, more than 691,000 tons of oil products were supplied to customers, including more than 641,000 tons for the domestic market, and over 50,000 tons for foreign markets. In Uzbekistan, key products supplied were: diesel fuel - more than 282,000 tons, gasoline - over 233,000 tons (including AI-80-K2-L – 222 million tons, AI-92- K-2-L - over 8,000 tons, AI-92-K5 - over 3 million tons). To enable stable loading of the Fergana Refinery some raw stock was imported from foreign and domestic markets.
The company also significantly increased the production of petroleum oils to 29,000 tons, achieving the international API quality standard.
Saneg supplies 1,550 customers, including 1,532 in the domestic market and 18 internationally. Among the foreign customers are Aronis Petrochemical FZE (Dubai), DYM Resources (Germany), Duato Corporation (UK), HILL (Kazakhstan), ASIA OIL, Elita Tichorat Ferrostal Limited LLC "Kand" (Tajikistan), "Tecza Energia" LLC "NGSA" Himbalt Trade OU (Poland), LLC "Prometey", LLC "Neftetrans" Vertex Oil Trade LTD, Gesanaster Sales (Kyrgyzstan), OGMA SSH FZ-LLC (Afghanistan), DYM Resources (Georgia).
Taxes
The company is one of the largest taxpayers in Uzbekistan. Over the past two years alone, tax payments have almost doubled - from 1.177 trillion soums (USD 103.5 million) in 2021 to 2,086 billion soums (USD 183.5 million) in 2022. In total, during this period, 3,379 billion soums (USD 297.4 million) was transferred to budgets at all levels.
Capital investment and construction
In 2022, as a part of the company’s strategic investment programme, 897 million soums (USD 78.9 million) was invested and the construction of 162 facilities was completed, representing 80% of the planned investments for 2022. Compared to 2021, the growth in the construction amounted to 108%, due to the development of the pilot site at the Yangi Uzbekistan field, a significant increase in the construction of gas transportation units and a start of the field development in the Ustyurt region. The constructed field facilities put into operation in 2022, comprised oil treatment facilities, in-field product pipelines, equipped wells, reservoir pressure maintenance systems, residential camps and other facilities.
Furthermore, 51.9 billion soums (USD 4.6 million) was invested in repairs to 165 facilities. This is 93% of the planned investments for 2022. The volume of major repairs was down by 10% compared to 2021 due to improved quality repairs in previous years. As a result, no repairs were required for many facilities during the reporting period.
Digitilization programme
In 2022, the company commenced an active digital transformation of all business segments, from oil production to the delivery of oil products to customers. Saneg has developed an integrated approach to digitalization of all assets, including development of a centre for production and processing control. According to experts, the economic effect of digitalization may increase crude oil production by at least 10% - the result anticipated by the end of 2024.
Saneg’s digitization programme also includes combining Saneg assets into a single telecommunications system, which will help in expediting decision-making, and preparing operational and field reports. The company intends to finalise this process in 2024.
The implementation of SAP S/4 HANA ERP has been completed at Fergana oil refinery. It includes the automation of accounting, financial and logistics units.