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3 reasons to work with Uzbekistan's oil and gas industry

Uzbekistan's energy sector is a market with a lot of potential that should not be overlooked. Its growing oil and gas industry combined with its increasing accessibility to foreign investors makes it an excellent place in which to trade.

Here are the top three reasons to join this ever-improving area of the oil and gas industry:


Gas exports are improving

As populations grow globally, the demand for resources like natural gas are rising rapidly, which is great for countries like Uzbekistan. The nation's gas exporting business is improving at an impressive rate, thanks largely to growing demand from markets like China. In fact, a new agreement to construct a pipeline has just been announced.

Speaking to Interfax, Uzbekistan's state oil and gas company Uzbekneftegaz said that a new section would be added to the Central Asia-China Pipeline allowing for more Uzbek gas to be exported to China via Kazakhstan. Currently, this project is still at the stage of preparing the preliminary feasibility study, but Uzbekneftegaz anticipates that construction will be completed by 2017.

The pipeline will be 210 km long, according to early estimates, and will cost Uzbekistan around $800 million. Currently, the nation only acts as a transit country for natural gas travelling to China, but this pipeline would allow it to trade directly with the nation, boosting the export industry.


Foreign investment is welcome

Uzbekistan has had issues with attracting foreign direct investment (FDI) in the past, partly due to factors such as bank regulation and restrictive access to foreign currency. However, the country's government declared attracting FDI a core policy priority last year, and since then it has improved the situation for international businesses significantly.

In the first nine months of 2014, Uzbekistan attracted over 24.2 trillion UZS (more than $10 billion) of FDI. This is 12.3 per cent more investment than in the same period of 2013, showing that the government's tactics are working. What's more, 63.3 per cent of this funding went to the fuel and energy industry, with international businesses getting involved with Uzbek oil and gas.

This situation looks likely to improve even more in the future, as Uzbek president Islam Karimov recently signed a law entitled "On Investment Activities" that is designed to further stimulate the sector. It will fill in "legal gaps", providing international investors with more rights, guarantees and legal protection.


A growing economy

Finally, Uzbekistan's economy is growing at an impressive pace, making it an excellent market to get involved in right now. The nation's gross domestic product (GDP) is estimated by the World Bank to have grown by 7.9 per cent in 2014; significantly more than the average for Europe and central Asia, which is estimated at 2.4 per cent.
Furthermore, this growth is expected to carry on into the future. From 2015-17, Uzbekistan's GDP is forecast to grow at an average annual rate of 7.9 per cent, falling slightly in 2015 before rising the next year.

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