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Sunday, March 09, 2008

Uzbekistan, South Korea eye natural gas

While Russia's Gazprom dominates Central Asian natural gas exports through its pipeline monopoly, the leaders of the "stans" are unhappy about the arrangement, as Gazprom buys cheap and sells dear to European consumers, United Press International (UPI) wrote.

Seeking to break the deadlock, Uzbekistan has been investigating alternatives, and on 25 February state-owned Uzbekneftegaz signed an agreement with a South Korean energy consortium led by state-run Korea Gas Corp. to develop a gas field in western Uzbekistan and construct a gas-chemical industrial complex.

Western Uzbekistan's Surgil gas field is estimated to have reserves of nearly 96 million tons of liquefied natural gas, an amount equivalent to nearly four years of South Korea's LNG consumption. The deal is generous to the Korean consortium. Joint venture partners Korean Gas Corp. and Lotte Daesan Petrochemical Corp. will each hold a 17.5% stake while LG Corp., STX Energy and SK Gas will each hold 5%, with Uzbekneftegaz holding the remaining 50%.

The deal, signed during a visit to Seoul by Uzbek President Islam Karimov, represents a useful marriage of convenience, as Uzbekistan is as eager to export energy as South Korea is to diversify its hydrocarbon imports. Rising energy prices have contributed to keeping South Korea's trade balance in deficit for the third consecutive month in February, which saw the country's exports total US$17.9 billion; imports totaled US$21.8 billion.

South Korean President Lee Myung-bak, sworn in last month after having scored a record victory margin in December's presidential election with his "Economy, First!" pledge, has moved swiftly to implement his "energy diplomacy."

On 26 February Lee met not only with Karimov, but Mongolian President Nambaryn Enkhbayar and Cambodian Prime Minister Hun Sen, all of who came to Seoul to attend Lee's inauguration ceremony. During his discussions with Enkhbayar, Lee stressed the need for closer bilateral cooperation in the resource and energy sectors, while Enkhbayar requested closer South Korean-Mongolian cooperation in the high-technology fields of bioengineering, IT and climate change. In his meeting with Sen, Lee emphasized deepening bilateral ties and asked for greater support of South Korean firms wishing to enter Cambodia's resource and construction markets.

It is Uzbekistan, however, that represents the potential crown jewel of Lee's "energy diplomacy." In 2006 Uzbek natural gas production was estimated at 62.5 billion cubic meters, of which 48.4 billion cubic meters was consumed domestically and 12.5 billion cubic meters exported, more than half going to Russia and the remainder to neighboring Central Asian states.

It is Uzbekistan's largely untapped natural gas reserves that are the real prize, however, as in 2006 the country's proven reserves stood at 1.798 trillion cubic meters. Uzbekistan is currently producing natural gas from 52 fields; with 12 major deposits it is the third-largest natural gas producer in the former Soviet Union, exceeded only by Russia and Turkmenistan, and is now one of the world's Top 15 natural gas producers. Since becoming independent in 1991, Uzbekistan has increased its natural gas production by nearly 40%, from 42 billion cubic meters annually to 62.5 billion cubic meters in 2006.

The recent South Korean-Uzbek Surgil gas field joint venture follows on earlier arrangements with foreign producers, including a 2006 35-year production-sharing agreement with an Asian consortium including Malaysia's Petronas, China's CNPC, South Korea's KNOC and Lukoil to explore Uzbekistan's sector of the Aral Sea and central Ustyurt plateau.

Of foreign investors, South Korea is establishing a dominant position, as earlier this year Daewoo International signed a contract to operate fields in northwestern Uzbekistan for five years. Even more worrying to Russia's hopes of complete dominance of Central Asian energy exports, in May 2007 arch-rival China signed a joint-venture accord with Uzbekneftegaz to participate in a natural gas exploration project in Namangan province.

While Karimov has been assiduously courting non-Russian energy investors, he adroitly has not shut Russia completely out of the picture. Following protracted negotiations a year ago, Russia's Soyuzneftegaz signed a new 36-year PSA with Uzbekneftegaz to invest US$462 million to develop gas fields in the Ustyurt plateau region and the Southwest Gissar concessions. Last month Lukoil acquired a controlling interest in the PSA and is hoping for eventual production of 3 billion cubic meters annually.

Nor has Uzbekistan completely shut out Gazprom. In 2004 Gazprom and Uzbekneftegaz signed a US$15 million, 15-year PSA to develop Uzbekistan's northwestern Shakhpati field. Two years later, in December 2006, Gazprom received exploration licenses to develop seven Uzbek concessions with combined reserves of 1 trillion cubic meters, and intends to invest US$400 million by 2011 and US$1.5 billion over the contract life to develop their concessions, from which they eventually hope to produce 13.6 billion to 16.4 billion cubic meters annually.
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Cambodia travel – some like it hot

If you’re thinking about visiting Cambodia soon, go this month (March) if you can handle some heat (by April, it’ll be even hotter). Or plan a trip for summer, when monsoon rains cool things down and really only inconvenience you for part of the afternoon.

A few years ago I traveled around Cambodia in late April, when the heat was really beginning to escalate (which it does starting around March, before hitting a peak in May or June to initiate monsoon season). The temperature was in the 90s and the humidity oppressive.

I remember stumbling around after a trip to the Toul Sleng Genocide Museum. The gravity of what I’d observed there was enough to make me delirious, but in addition I’d come down with heat stroke. I spent the next couple days cooped up in my room with fever, a migraine and nausea. If you go to Cambodia in April, bring a big hat, and drink bucketfuls of water.

Why go: Thailand’s neighbor to the southeast, Cambodia is fascinating in many ways, but it has a sobering yet educational impact on many tourists; its recent history is so heartbreaking that you can’t leave the country the same person that you were upon entry. Angkor Wat and its surrounding temples and ruins are truly sights to behold. And adventurous foodies can try all manner of unusual edibles: locusts and spiders, for instance.

What’ll it cost me?: In his article “Countries where dollars go the distance,” L. A. Times Staff Writer Jason La breaks down general food and lodging costs. Right now you’ll spend around $1200 for a flight from LAX to Phnom Penh (PNH) after taxes. Maybe that sounds exorbitant, but if you’re shelling out $10/night for a room, you may decide it evens out. If you’ve got miles, though, all the better.
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Cambodia's thriving real estate market enriches the elite and sidelines the poor

PHNOM PENH, Cambodia: An old hospital was razed to make way for Phnom Penh's tallest building — a 42-story twin condominium tower. A garbage-strewn slum became prime real estate after police evicted its dwellers to a parched rice field outside the capital.

Cambodia is experiencing a construction boom fueled by foreign investment, particularly by South Koreans, and buying and selling among the country's few nouveaux riche — while leaving the poor majority behind.

Shopping malls and tall apartment buildings are sprouting up, transforming the capital's landscape that once bore the charm of colonial French-styled villas but resembled a ghost town at the fall of the genocidal Khmer Rouge regime nearly 30 years ago.

Political stability and robust economic growth of nearly 10 percent have lured investors to the real estate market that has seen prices surge over the last few years — though they are still lower than in neighboring Vietnam or Thailand.

"Cambodia was sleeping for many years and now it's waking up," said Claire Brown, managing director of Britain-based Claire Brown Realty who began buying and selling property in Phnom Penh two years ago.

"Everybody wants to get a piece of the action," she said by phone. "The time to get in is now because soon it's going to be too late."

Prime city land prices have tripled over the last two years to US$3,000 (€2,000) per square meter. Those kinds of returns have drawn rich and middle-class Cambodians, as well as those living abroad.

"In buying and selling land, they could get profit 100 or 200 percent a year, if they make the right bet on the right location," said Dith Channa, the sale manager of CPL Cambodia Properties Ltd., a Phnom Penh-based real estate agency.

But the soaring real estate market is also widening the gap between the rich and the poor.

"Phnom Penh city is getting modern every day — of course for the wealthy," said Chhorn Et, a former slum dweller now living with hundreds of others in a village in the middle of rice field about 20 kilometers (12 miles) from the capital.

"The government swept us away because they regarded us as very unpleasant for their eyes," said the 34-year-old woman who scavenges for discarded cans and bottles to sell for a living.

The flourishing property market is also happening in the shadow of problems of land rights disputes that, in recent years, have often pitted the poor against wealthy developers with links to the Cambodian political establishment.

"We're moving toward possibly about 10 percent of the population owning 90 percent of the land in Cambodia," said Naly Pilorge, director of the nonprofit human rights group Licadho.

That could fan social and political unrest, she and others have warned.

The biggest projects are being funded by South Korean investors and companies, which have been the leading investors in Cambodia following the resumption of diplomatic ties between the two countries in 1997. Investment and tourists from South Korea have surged following a 2006 visit to Cambodia by former President Roh Moo-hyun.

World City Co. Ltd., a South Korean company, is investing US$2 billion (€1.3 billion) to build a "satellite" urban complex called Camko City on a 120-hectare (300-acre) area on the northwest side of Phnom Penh. The project, the single biggest foreign direct investment in Cambodia to date, will include residential, commercial and public facilities — villas, condos, trade and financial centers, office buildings, shopping centers, hotels, schools and hospitals.

Meanwhile, at a busy corner leading up to the city's landmark Independence Monument, an old government hospital has been torn down to make way for a 42-story condominium and shopping complex worth about US$250 million (€162 million). That's going to dramatically change Phnom Penh's skyline, where the tallest building now is a 15-story hotel.

It is going to be the first luxury residential building and tallest structure in Cambodia, said Kim Tae-Yeon, chairman of Yon Woo Inc., a South Korean developer.

Kim said the towers will have about 500 units of apartments, office space and retail shops with price tags ranging from US$112,000 (€72,647) to US$1.8 million (€1.17 million) a unit. Construction will start next month and take 3 1/2 years to complete, but Kim said nearly half of the units have already been bought.

In recent years, Siem Reap, a northwestern town near the famed Angkor Wat ruins, also has seen a frenzy of hotel and guesthouse construction for the growing numbers of tourists.

Thrilled with the boom, Prime Minister Hun Sen has said it has been made possible by the political stability he has brought. In a recent speech he warned that if he is not re-elected in July elections, property prices could nosedive.

"It was a threat, a dirty trick to gain votes," said Son Chhay, an opposition party lawmaker.

Son Chhay and some human rights workers, including Pilorge of the human rights group Licadho, believe that the boom is partly fueled by people laundering money from illegal logging, drug trafficking and tax evasion by plowing the cash into the real estate market.

"This is not going to be healthy for the Cambodian economy," Son Chhay says.

There are also concerns that the rapid price gains are creating a bubble that will eventually pop.

Eric Sidgwick, senior economist at the Asian Development Bank office in Phnom Penh, said the real estate market has been "driven by a combination of genuine demand for business-related and residential construction," as well as a growing population, increased urbanization and speculation.

Still, there were "reasons to be concerned about the recent increase in real estate prices and the dangers of further inflating a speculation-led bubble," he said in an e-mail. He declined to comment about any possible link between money laundering and the property market boom.

Meanwhile, poor residents like Chhorn Et, the former slum dweller who was moved outside the capital, are left to cope with a stark reality in their new village, which has no running water or sewage system.

Although each family has been given a small piece of land, they complain of the lack of means to support their livelihoods. They have to travel daily to the capital to do odd jobs as motorbike taxi drivers, construction workers or scavenge for bottles and cans to sell to buy food.

Many of them are too poor to afford a latrine and have to use a nearby rice field as a toilet, said 37-year-old Mom Somaly, a mother of five children.

Pointing to a distant land-for-sale sign, she said "soon they may not even have a field to use as toilet any longer."
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