Uzbekneftegaz Associated Gas Project

This a CDM gas flaring reduction project with Uzbekneftegaz.There are three associated gas fields involved in the proejct, including the North Shurtan, Garmiston and Kumchuk fields.The project will collect the associated gas, use it and therefore reduce GHG emissions.Preparing this CDM project turned out to be a challenging task and access to information and data for preparing project documentation was cumbersome. Most importantly, to date no firm investment decision has been made to construct relevant gas gathering system for the flared gas. On the postive side, all relevant environmental and safeguards studies have been carried out for the investment.The carbon unit of the World Bank, responsible for the carbon deal, informed the client in May 2010 that it will not continue with the project.Three major reasons were given:First, the data and information provided by the client to date is not sufficient to finalize the PDD and submit for validation. Much more work would need to be done over the next few weeks.Second, the client has not made a firm investment decision to date to build a gas gathering infrastructure which is a pre-condition of the project and for being eligible for carbon credits. Without the finalization of the gas gathering infrastructure the client is not eligible for carbon credits. Equally important, even if the investment decision is taken today it was estimated that it takes about 1 1/2 years to finalize construction which would mean that the period for which the client can actually claim credit will be less than a year.Third and related to the above two points, having observed the slow progress of the project to date and the fact that no investment decision on the infrastructure has been made two carbon funds dropped out as potential buyers for the project and no new interested parties could be found.Based on the above uncertainties and the fact that Kyoto is running out in 2012 it was decided to cancel this CDM project.