President of Uzbekistan has approved the mechanism for the implementation of the project of the third leg of Uzbekistan-China pipeline. The pipeline is planned will be fully operational in January 2015.

Construction of the first phase of the third leg pipeline (318 km from Gazli to the Uzbekistan and Kazakhstan state border) and gas flow metering unit UKMS started in April 2012 and is to be completed in March 2014. In April 2014 the operators plan to complete construction and commission the compressor station UCS3. Construction of the second stage of the third leg pipeline (212 km from the border of Turkmenistan-Uzbekistan to Gazli), compressor station and related facilities UCS1 is scheduled to complete in January 2015.

Uzbekneftegaz together with UzLITIneftegaz, design institute CPPE (China) and other stakeholders will develop by April 1, 2013 and submit for the approval of the Cabinet of Ministers the feasibility of the project. In this regard, a joint venture Asia Trans Gas, on an exceptional basis, has received permission in the period up to April 1, 2013 to carry out construction of the third thread along with the development of design documents.

As part of the project, Uzbekistan has released companies from taxes on corporate income – income from foreign banks and financial institutions that received from loans and the income of foreign companies received from the execution of works, rendering of services.

In addition, the work and services performed by non-residents of the republic are exempt from value-added tax. Services provided by Asia Trans Gas for transportation of Uzbek natural gas are also exempt from value-added tax for the maturity term of attracted foreign loans. The specially created joint venture Asia Trans Gas since December 2009 provides an international transit of Turkmen natural gas through Uzbekistan-China pipeline. Later, the governments of Uzbekistan and China agreed to expand the design capacity of the Uzbekistan-China pipeline by the construction of the third leg of the pipeline. Also, on April 28, 2011 the Uzbek government approved the agreement on the basic terms of the natural gas sale contract, signed April 19, 2011 between Uzbekneftegaz and the China National Petroleum Corporation. In addition, on October 25, 2011 Uztransgaz and PetroChina International Company Ltd (China) signed a natural gas purchase agreement.

Experts believe the third leg will play an important role in the diversification of Uzbek gas exports. The pipeline with total length of 1,840 km, along with the existing first and second lines, will annually export from Turkmenistan, Uzbekistan and Kazakhstan to China 25 billion cubic meters of gas. The new line will make it possible to increase the overall throughput of the Turkmenistan-China pipeline to 55 billion cubic meters of gas. The total project cost exceeds $2.2 billion. (Source: “Uzbekistan Today” newspaper)