Saneg sells part of Fergana Oil Refinery's assets to Air Products for $140 million

Saneg announced that it is selling a portion of the refinery's assets to Air Products, a global leader in hydrogen supply. The deal, valued at $140 million, will facilitate the production of hydrogen at the Fergana Oil Refinery.

"Air Products, a world leader in hydrogen supply, has decided to purchase these assets from Saneg at the Fergana Oil Refinery, aligning with the broader global modernization process of the plant, which aims to expand and optimize its production capacities. This strategic agreement opens the door to the broader commercial use of hydrogen in Uzbekistan's industrial markets," the statement said.

The specifics regarding the exact share of the refinery's assets being transferred to Air Products were not disclosed by Saneg. The deal is expected to close in the fourth quarter of 2024.

The sale includes a steam methane reforming (SMR) unit, capable of processing both natural gas and liquefied gas, as well as two pressure swing adsorption (PSA) units previously supplied by Air Products. These components will form the basis for hydrogen production at the refinery.

Privatization of the Fergana Oil Refinery

Saneg (formerly known as Jizzakh Petroleum, now part of the Industrial Energy Group) has owned a stake in the Fergana Oil Refinery for two years. On May 22, 2022, the State Assets Management Agency announced the sale of 100% of the refinery's shares to Saneg for $100 million.

As of August 21, 2024, 58.5% of the refinery's shares remain with SAMA, while 41.5% are held by Saneg, indicating that full ownership has not yet transferred to Saneg. Previously, SAMA attributed this to the incomplete payment of the agreed amount. Saneg, in turn, has stated that it will fulfill the remaining payment according to the schedule.

Under the privatization agreement, Saneg is obligated to:

•  Modernize the refinery to increase the production of modern and environmentally friendly gasoline, Euro-5 diesel fuel, Jet A-1 jet fuel, and liquefied natural gas;
•  Upgrade oil processing units and increase production capacity to at least 2 million tons;
•  Invest over $380 million in these initiatives (Saneg reported to Kun.uz in July that it has already invested more than $250 million).

For context, the Fergana Oil Refinery reported a net profit of 19.3 billion UZS in 2022, 469.6 billion UZS in 2023, and 68.4 billion UZS in the first quarter of 2024. However, the refinery recorded a loss of 96 billion UZS in the second quarter of this year.