The Asian Development Bank said Wednesday it will help a Korean consortium build the largest petrochemical plant in Uzbekistan that could meet the country’s commercial and industrial need for gas.

A consortium composed of three Korean companies, Honam Petrochemical Corp., Korea Gas Corp. and STX Energy Co., established a joint venture company called Uz-Kor Gas Chemical LLC with Uzbekistan’s state-controlled oil and gas company National Holding Company Uzbekneftegaz.

The ADB said it will provide a 13-year loan of up to $125 million and a 13-year guarantee of up to $275 million that will cover certain risks on loans extended by commercial lenders to Uz-Kor Gas Chemical.

The total project cost is estimated at $4 billion with additional financing to come from the Export Import Bank of Korea, Korea Trade Insurance Corporation, China Development Bank, and National Bank of Uzbekistan. Money will also come from various European export credit agencies and international commercial lenders.

ADB officials expect the project will demonstrate the viability of large-scale foreign joint ventures and could pave the way for future foreign direct investments in Uzbekistan’s private sector.

The plant is expected to be operational in early 2016.

“ADB’s provision of a partial risk guarantee has helped draw in commercial lenders to the project and that could spur further foreign investment in this key sector,” said Thomas Minnich, senior investment specialist in ADB’s Private Sector Operations Department.

Uzbekistan is the second largest gas producer in the Commonwealth of Independent States behind the Russian Federation, with total reserves of 59.4 trillion cubic feet.

The petrochemical industry in Uzbekistan is small, however, meaning the country receives less benefits than required from its abundant gas reserves, ADB explained.

“Developing the domestic petrochemical sector will diversify the country’s economy, generate additional revenue and create jobs,” it said in a statement. 

(Yonhap News)