Air Products and SANEG, a company linked to Ruussia's Gazprom have announced a deal to acquire units of the Fergana Oil Refinery for $140 million. This was reported by the press service of SANEG.
Air Products is set to acquire SANEG's some units at the Fergana Oil Refinery. The US company will receive ownership of a hydrogen production unit and a pressure swing adsorption unit, the press service of SANEG (former Jizzakh Petroleum) said.
In 2021, the Fergana Oil Refinery entered into an agreement with Air Products for the supply of two pressure swing adsorption (PSA) units for hydrogen production. Their purchase and installation became a key component in the modernization program, the report says.
When asked whether the company is buying back the equipment delivered from the United States, SANEG noted: “[Here,] more precisely, we are talking about processing. The products will be manufactured under the full technological cycle and quality control of Air Products.”
According to SANEG, this transaction is in line with the global modernization process of the plant and is an important step in expanding and optimizing its production capacity.
SANEG founder Bakhtiyor Fazylov said that the deal with Air Products “marked the completion of another milestone in the implementation of our long-term plans to modernize the Fergana Refinery together with the world leader in hydrogen production.”
“Our joint work within the framework of the agreement will be an important factor in achieving one of the main priorities of the Government of Uzbekistan - strengthening the energy security of the state by increasing domestic supplies of hydrogen,” he said.
“Our advanced technologies and experience in hydrogen production will expand the refinery’s capabilities and support the growth of the oil and gas industry in Central Asia, which, in turn, will help Uzbekistan achieve a higher level of sustainability and energy independence, while contributing to the green future of the Republic,” said Seifi Ghasemi, chairman, president and CEO of Air Products.
It should be noted that the deal was announced on the eve, Seifi Ghasemi was hosted by the President Shavkat Mirziyoyev.
The Fergana refinery, managed by SANEG, is currently undergoing a comprehensive modernization aimed at increasing its production capabilities. Improvements include the introduction of a hydrocracking process and an increase in the depth of fuel refining to more than 92%, in particular for the production of Euro-5 diesel fuel and aviation kerosene.
Among the goals of the refinery modernization is also to assist the government of Uzbekistan in diversifying energy sources by industrializing hydrogen production, the statement noted.
The acquisition includes a steam methane reformer (SMR) unit capable of processing both 100% natural gas and liquefied gas.
“These assets, combined with two pressure swing adsorption units initially supplied by Air Products, will provide a reliable base for hydrogen production for both the refinery and the commercial market as a whole,” SANEG said.
The deal is expected to close in the fourth quarter of 2024.
Privatization of the refinery
If now part of the production units is sold for $140 million, then in May 2022, 100% stake in the refinery was valued at $100 million and sold to the largest privately-owned oil and gas company SANEG, which at that time had subsoil use rights to 103 oil and gas fields. Previously, FNPZ and the fields belonged to Uzbekneftegaz.
Despite the deal, as of August 21, the state, represented by the State Asset Management Agency, still holds a 58.5% stake, and SANEG owns 41.5%. In May, State Assets Management Agency stated that the investor had not yet fully paid for the plant. "The share will be transferred [to the investor] in proportion to the paid portion of the purchase price. After the full payment of the purchase price and performance of the terms of the agreement, the share will be transferred in full," the agency said, without specifying the deadline for the company to pay the entire amount.
"The deal with Air Products was prepared with the participation of the Government of the Republic of Uzbekistan, which is interested in large foreign players entering the domestic market. The agreement does not provide for the transfer of shares of the enterprise to Air Products. While, it would be more correct to comment on the details of the deal after all its parameters are finalized, namely at the end of the fourth quarter of this year," SANEG noted.
According to the investment program for the Q2 of 2024, the cost of modernization has increased to $389.3 million, as of January 1, the remainder is $171.8 million, the foreign partners are Gas Project Development Central Asia from Switzerland and Belvor Holdings Limited from Cyprus. Earlier, it was reported that these companies are connected with Bakhtiyor Fazylov.
Since 2022, the plant's net profit has reached 557.3 billion soums: in 2022 - 19.3 billion soums, in 2023 - 469.6 billion soums, in the first quarter of 2024 - 68.4 billion soums.
