Tashkent, Uzbekistan (UzDaily.com) -- The Russian company LUKOIL has reduced gas supplies from Uzbekistan to China. This was announced by the First Vice President for Economics and Finance of the company Alexander Matytsyn.

“We have significantly reduced production in the second quarter due to the new OPEC + agreement, as well as a decrease in gas supplies from Uzbekistan to China, which was a consequence of the negative impact of the coronavirus pandemic,” he said.

Pavel Zhdanov, LUKOIL’s vice president for finance, stressed that, in terms of foreign assets, in addition to lower prices and a reduction in gas production, the results were also negatively affected by the redirection of Uzbek gas from exports to the domestic market due to lower demand from China. In this regard, the results of the second quarter were also negatively affected by the adjustment of the selling price of Uzbek gas in the first quarter.

He noted that the consequences of the coronavirus pandemic have led not only to a temporary decrease in gas demand in China, but also to an excess of the cost of pipeline gas over the cost of LNG. The result was a reduction in the volume of purchases of Uzbek gas from China.

“In this regard, we were forced to gradually reduce the volume of production under our projects in Uzbekistan. At the moment, the volume of daily production is approximately 20% of the design capacity, and the production of the Gissar project has been completely stopped,” he added.

“At the same time, a significant amount of gas already produced in 2020 was not exported and remained on the domestic market. Despite the fact that China is gradually increasing the volume of purchases of Uzbek gas, gas from our projects has not yet been exported,” Zhdanov said.

“We held negotiations with Uzbekistan and reached a preliminary agreement on the sale of gas on the domestic market in 2020. We also continue negotiations on the resumption of export gas supplies from our projects,” he added.

“At the end of the quarter, the Company showed a net loss against the backdrop of positive operating profit. The reason for the loss was the depreciation of assets in the amount of 39 billion rubles, of which 36 billion rubles are related to projects in Uzbekistan,” the company said.