Uzbekneftegaz will tighten control over joint ventures due to falling production and dividend problems.
Uzbekneftegaz has identified systemic problems in the operations of several joint ventures, ranging from non-transparent reporting and weak controls to declining production and incomplete dividend payments. The company intends to review their financial and production activities and strengthen the coordination of investment projects.
Uzbekneftegaz is tightening oversight of its joint ventures due to declining production and dividend issues.
The state-owned oil and gas company Uzbekneftegaz has begun a systematic review and strengthening of oversight over the activities of joint ventures in which it holds stakes, the company's press service reported.
At a meeting chaired by Uzbekneftegaz CEO Abdugani Sanginov, a critical assessment of the following joint ventures was conducted:
* Natural Gas-Stream (Uzbekneftegaz holds 50%, Natural Gas Stream Holding holds 49.94%, and Gas Project Development Central Asia AG holds 0.06%);
* New Silk Road Oil and Gas (50%, the remaining 50% is held by China's CNODC);
* ANDIJANPETRO (50%, the remaining 50% is held by Russia's Zarubezhneft Eurasia).
The company noted that at some of these enterprises, work processes were improperly organized, accounting and financial transparency was lacking, and accountability mechanisms to Uzbekneftegaz were not fully operational.
According to the company, this led to an annual decline in production volumes, questions about the efficiency of investment utilization, and the financial stability of the enterprises. Furthermore, dividend payment obligations were not fully met.
Uzbekneftegaz acknowledged that, to date, the founder had not established the necessary level of control over the activities of the joint ventures, which contributed to the exacerbation of existing problems.
The company's management stated that this approach will be unacceptable in the future. Joint ventures were required to strictly adhere to corporate governance principles, ensure the rights and interests of Uzbekneftegaz, and ensure transparency of financial and operational indicators.
In particular, the efficiency of production capacities, geological exploration, and geological and technical measures will be re-evaluated.
An inventory of outstanding debt to Uzbekneftegaz has also been instructed, along with measures to digitalize financial flow and procurement controls.
All activities, investment projects, and work processes planned by joint ventures must now be approved by Uzbekneftegaz. Prior to approval, the necessity, cost, and economic viability of each project will be analyzed.
Furthermore, the company intends to review the financial status and dividend policies of the enterprises in which it holds a stake. The objective is to ensure the full and timely payment of dividends for 2025-2026, repay existing debt, and establish systematic oversight of future obligations.
Uzbekneftegaz stated that these measures are intended to prevent the misuse or ineffective use of funds and strengthen oversight of expenditures and decision-making.
The company cites the goal of the changes as transforming joint ventures into financially stable and effectively managed companies with growing production figures, net profit, and profitability.
In May, Uzbekneftegaz CEO Abdugani Sanginov criticized the decline in gas production at the Gazli oil and gas production department and the condition of 461 wells, and discussed measures to increase production. He also ordered oversight of the Canadian company Condor Energies, which is "not fulfilling its obligations."