Uzbekistan Gas Leak Repair Facility

pipeline

Prospective

The Project will establish a financial Facility under the Ministry of Economy and Finance (MoEF) for gas leak repair in legacy state-owned gas assets, thereby reducing gas losses, and improving capacity of the operator to manage emissions. The Project will support repair works at the state-owned gas transmission system operator (TSO) Uztransgaz (UTG) only. The Facility will kick off with an initial USD 10 million grant from the GFMR trust fund and will be topped up with financial savings resulting from gas leak repair over time, which will be re-invested into the Facility, mobilizing additional capital for further rehabilitation of the country’s legacy gas infrastructure. While repairing gas leaks is expected to yield significant financial savings, and may even be cash-positive, grant funding from GFMR is needed to start up the proposed scheme, given the current, difficult financial position of UTG.The Project comprises three components: (A) “Repair of gas leaks”; (B) “Capacity building of UTG to monitor and report gas losses and emissions reduction"; (C) “Establishment of the Facility and project implementation support”.Component A: Repair of gas leaks. This is the main component of the Project, funding repair of legacy gas infrastructure according to the original design specifications, including replacement of small parts that are beyond repair. Notably, this means that project funds will not be used to construct new gas transmission facilities, nor will they be used to significantly increase the capacity of existing facilities. The work will be confined within the fence of facilities owned and operated by UTG, in line with national HSE legislation and regulations. Notably, this implies that project funds will not be used to carry out work on third-party land. As and when gas leaks are detected, gas leak repair activities will be proposed for funding through the Facility by UTG on a regular basis, according to pre-agreed eligibility criteria and prioritized based on the estimated cost vs. the expected emission reduction potential. Component A also includes procurement of gas leak detection and measurement equipment, personal protection equipment for working on-site, and digital solutions for monitoring methane emissions. Periodically, UTG will report gas savings resulting from leak repair to MoEF according to a pre-agreed protocol, and a pre-agreed portion of the associated financial savings will be set aside for re-investment in the Facility during a pre-agreed period of time.Component B: Capacity building of UTG to monitor and report gas losses and emissions reduction. This component comprises activities to develop the organization of UTG to carry out measurement, monitoring, reporting, and verification (MMRV) of methane emissions in line with international standards and best practices in the oil and gas industry, in particular the Oil and Gas Methane Partnership (OGMP) 2.0 Gold standard. Specifically, the Project will provide technical support to UTG to achieve the OGMP 2.0 Gold Standard Pathway status. Component C: Establishment of the Facility and project implementation support. The Project will include a project implementation support component for procurement of consultancy services by the Implementing Agency to carry out project implementation tasks. This also pertains to consultancy services needed by MoEF to carry out its supervisory role.

World Bank Group

Project

Oil and Gas, Natural Gas, Commercial, Government