Foreign investments into domestic hydrocarbon sector Asian Development Bank provided a loan of $100 million and a guarantee of political risk of $200 million for the development of natural gas field Kandym in the southwest of Uzbekistan.

Asian Development Bank (ADB) office in Tashkent has informed, Lukoil Overseas Uzbekistan, a Lukoil Group company, will use the $100 million loan for development of Kandym gas field as part of the 35-year agreement with the National Holding Company Uzbekneftegaz.

Development of the field, which has proven reserves of 84 billion cubic meters, will begin in 2015.

This deal is the first commercial loan by ADB in Uzbekistan’s oil and gas industry and should pave the way for further private sector participation in this key export industry, said Siddharth Shah, investment officer at private sector department of the ADB.

Experts believe the project implemented in Bukhoro region, will boost local employment and overall economic growth.

Since natural gas in Kandym field has a high content of sulfur, Lukoil plans to use the most modern, economically and environmentally sound gas extraction technology, in accordance with ADB’s environmental policies.

ADB loan was allocated from ordinary capital resources with a maximum term of up to 8 years with a grace period of 18 months. The project will also involve a $100 million loan of the Islamic Development Bank while the Multilateral Investment Guarantee Agency will provide political risk guarantee of $100 million. Political risk guarantee will cover the loans from commercial lenders, including those from BNP Paribas, corporate and investment bank Crédit Agricole and the Korea Development Bank. (Uzbekistan Today newspaper)