Uzbekneftegaz Considers Merging Gissarneftegaz Amid Risk of Bankruptcy

Tashkent, Uzbekistan (UzDaily.com) — Uzbekneftegaz is considering the merger of its joint venture Gissarneftegaz due to the company’s underperformance and risk of insolvency, according to the state company’s press service.

Chairman of the Board Abdugani Sanginov criticized the sector’s efficiency, noting a significant mismatch between allocated resources and actual results. While the investment plan was executed at 100.1%, growth reached only 63.4%, reflecting a US$111.4 million shortfall. Export performance similarly lagged: plan execution was 129% but growth was 94.1%, corresponding to a US$10 million decrease.

An analysis of joint ventures showed systemic issues: out of nine ventures with Uzbekneftegaz, only two paid dividends, and the current control system was deemed ineffective.

«Gissarneftegaz» drew particular concern. The project, with an investment of US$157 million and a planned gas production of 13.2 billion cubic meters for 2016–2025, achieved only 2.2 billion cubic meters (16.4% of the target). Oil and condensate production also lagged, while costs rose 40% and losses increased 70%. About 550 employees work at the venture, with salary delays and no optimization measures implemented.

Sanginov ordered a detailed performance review of the enterprise, an assessment of reserves efficiency, and the initiation of merger negotiations with «Uzbekneftegaz». Additionally, the head of the investment management department was dismissed for ineffective oversight.

Responsible officials have been tasked with preparing proposals to enhance the operational efficiency of all joint ventures involving the company.