20 January, 1997 - A US$ 90 million (ECU 71 million) loan from the European Bank for Reconstruction and Development (EBRD) will enable the National Corporation for Oil and Gas Industry of Uzbekistan, Uzbekneftegas, to upgrade the Fergana Refinery located in the far east of the country. This will allow the refinery to process domestic crude oil with a high sulphur content as well as improve the refinery's safety system and reduce environmental pollution. In order to coordinate the implementation of the project, the EBRD signed a co-lenders agreement today with the Export-Import Bank of Japan (JEXIM).

At the signing ceremony in London, Ron Freeman, First Vice President of the EBRD, said: "By processing domestic crude oil, Uzbekistan can achieve a greater level of self sufficiency in the hydrocarbons sector. The improved processing of domestic crude oil with its high sulphur content will provide Uzbekistan with top quality oil products processed at the refinery. The improvements will also put the Fergana Refinery in compliance with international environmental and safety standards."

Ibrat Zainutdinov, Deputy Chairman of Uzbekneftegas, said: "Modernising the Fergana Refinery as well as completing another refinery in Bukhara will mean that all domestically refined products will be of high enough quality to significantly increase exports. The Fergana Refinery is an essential part of a programme that Uzbekneftegas has in place to both reduce crude oil imports and increase exports of oil products."

The refinery has changed its raw material from Russian crude oil, with a low sulphur content, to local crude extracted from the recently developed Kokdumalak oil field, which has a high sulphur content, and from other domestic sources. The proceeds of the loan will be used to purchase and install a desulphurisation unit. The loan will also finance coker and reformer revamping; safety improvements for an emergency flare system; refurbishment of water mains for emergency water supplies; a hydrogen sulphide detection system; waste management systems; and project management.

Uzbekneftegas is a fully integrated, state-owned oil and gas company responsible for managing the entire oil and gas industry of Uzbekistan. The total cost of this project is US$ 195.5 million (ECU 155.3 million). The EBRD is co-financing, for the first time in countries of the former Soviet Union, with JEXIM which is lending in yen an amount equivalent to nearly US$ 89 million (ECU 70.7 million). The balance is coming from Uzbekneftegas.

A technical cooperation programme will introduce a modern accounting and management information system. In addition, it will support the introduction of an efficient distribution system and effective planning and scheduling of refinery operations.