21st Century Silk Road: Uzbekistan and CNPC Begin Drilling at Mingbulak Oil Field

According to a statement from Uzbekneftegaz, the Mingbulak oil field development project has been resumed in Uzbekistan after it was put on hold in 2015. The Mingbulakneft joint venture between China National Petroleum Corporation (CNPC) and Andijanneft – a subsidiary of Uzbekneftegaz, has commenced production drilling at the oil field.

The drilling contractor is China’s XIBU Drilling Engineering Company Limited. Upon reaching its project capacity, Mingbulak is expected to produce around 1.5 million barrels of crude oil per year.

In 2008, Uzbekistan reached an agreement with CNPC about creating a joint venture to develop Mingbulak. The Uzbek side also hoped to utilize Chinese experience at other oil fields in the region. It was initially expected that CNPC would invest $211.7 million dollars between 2010 and 2014. However, in 2015, Mingbulakneft has temporarily ceased its activity due to low oil prices.

At the moment, the project’s schedule has been extended until 2035, but the amounts of investment remained the same with less than 10 percent of the total investment amount utilized to date.

The Mingbulak oil field was first discovered in 1992 in the northern part of Fergana Valley in eastern Uzbekistan. Crude oil deposits were found 16,400 feet beneath the surface and well pressure reached up to 17,635 psi. And here you thought you were under a lot of pressure at work.

On March 2, 1992, a blowout caused a fire at the site. A gushing fountain of crude oil covered the area of 150 acres and burned for two months. During the calamity, from 35,000 barrels to 150,000 barrels per day were released until the fountain died on its own. The accident at Mingbulak is regarded as the largest inland oil spill in history and the fifth largest oil spill overall.

Donald is a strategist for economiccalendar.com. He specializes in a fundamental approach while informing traders of relevant economic data. Actively trading since university, Donald trades indices and commodities. He earned his Bachelor's in Finance from Baruch College's Zicklin School of Business in New York City.