S.Korea to receive $1 bn in unpaid bills from Uzbek gas project

South Korean firms are poised to receive $1 billion in unpaid bill that has accumulated since 2017 from Uzbekistan’s Surgil gas project as the two governments agreed on a repayment plan on Thursday.

The agreement was signed by Korea’s Deputy Prime Minister Choo Kyung-ho and his Uzbekistani counterpart Jamshid Khodjaev at a meeting in Tashkent on Sept. 7, the Korean government said on Friday. Details on the repayment plan are not disclosed.

The two countries started the development of the gas field and related petrochemical complex in Surgil, south of the Aral Sea of Uzbekistan in 2008 and began commercial production of liquefied natural gas (LNG) in October 2015. The joint project for LNG and petrochemical products manufacturing will last until 2041.

Uz-Kor Gas Chemical LLC, a joint venture between a Korean consortium and state-owned Uzbekneftegaz, produces LNG in the field. Uzbekneftegaz holds a 50% stake in the JV, and the Korean consortium’s Lotte Chemical Corp., state-run Korea Gas Corp. (KOGAS) and GS E&R Corp. respectively own 24.5%, 22.5% and 3% in the venture.

A subsidiary of Uzbekneftegaz is responsible for the gas sales and payment to the Korean consortium in the US dollar. But the Uzbekistani firm has not paid the Korean companies $1 billion since 2017 as the Uzbekistani sum depreciated about 72% against the US dollar from 2017 to 2022.

The accounts receivable will be paid to the Korean companies via the JV.

In addition to the repayment plan, the two governments discussed the acceleration of Korean businesses in Uzbekistan. They will seek expansion of cotton cultivation area of POSCO International Corp., which has entered the Central Asian country’s textile industry, and a land grant for a Tashkent-based information tech business center that Korean companies have constructed.

Uzbekistan also pledged it will support Korean firms’ participation in its transportation infrastructure projects, as well as in the medical, eco-friendly and digital industries.

Choo, who is also the finance minister of Korea, visited a rare metal production center in Chirchiq, an industrial city of eastern Uzbekistan, to review a project to commercialize the metals. He said the bilateral cooperation should be strengthened as Uzbekistan strives to commercialize its mineral resources and Korea puts efforts to diversify supply chains for the resources.

The finance minister also met with Uzbekistan’s President Shavkat Miromonovich Mirziyoyev and asked for support for Korea’s port city Busan, which is a candidate to host the World Expo 2030.

Write to Sang-Yong Park at yourpencil@hankyung.com
Jihyun Kim edited this article.