Uzbek President Shavkat Mirziyoyev is a man with a mission: to add value to everything he can. Uzbekistan is emerging from its hermit status under the previous president, Islam Karimov, who died in 2016, and since then Mirziyoyev has implemented one reform after another, where the goal has been to make better use of the country’s resources and move the country up the value chain to create better paid jobs for the burgeoning young population.

The most obvious example is the cotton crop, which has traditionally been the country’s bread and butter. A major foreign exchange earner for two decades since the country’s independence in 1991, Mirziyoyev radically banned the export of raw cotton and then privatised the entire sector in 2021, forcing the owners to invest into new machines and move up the value chain to make textiles and thread amongst other things.

Now Mirziyoyev is at it again: Uzbekistan has launched the construction of a petrochemical plant from scratch to supply the country with over a million tonnes per year (tpy) of plastic.

The Gas Chemical Complex MTO (methanol to olefin) Central Asia Karakul Complex is a petrochemical complex being built near the ancient Silk Road city of Bukhara and is a showcase of the “New Uzbekistan” transformation.

The plant will transform methane into methanol and use that as the feedstock to make ethylene, propylene and various polymers (PP, PET, EVA, LDPE and HDPE) that when at full production is expected to make 1.1mn tpy of plastics. The facility will be unique in Central Asia and supply regional markets as well as Uzbekistan’s own domestic market.

The country produces about 30bn cubic metres of gas a year – not quite enough to power its own economy – but it currently imports all its plastics.

The project started in 2019 when the government studied the country’s needs and looked at a total of 47 different types of plastics before settling on five that it intends to make itself, using its own gas production as a feedstock from the Mubarak gas fields. The GCC MTO was formally created by presidential decree in August 2021.

Name	production volume	use	domestic/export share
low density polyethylene terephthalate (LDPE)	80,000 tonnes per year	for pipes	50% sold domestically
high density polyethylene terephthalate (HDPE	280,000 tonnes per year	Used in automotive industry for things like bumpers	18% will be sold on the domestic market
ethylene vinyl acetate (EVA)	100,000 tonnes per year	used in footwear, sports, and leisure applications.	40% will be sold domestically with the rest for export
Polyethylene terephthalate (PET)	300,000 tonnes per year	the most common thermoplastic polymer resin of the polyester family and is used in fibres for clothing, containers for liquids and foods, and thermoforming for manufacturing, and in combination with glass fibre for engineering resins.	100% domestic
Polypropylene (PP)	350,000 tonnes per year	a robust heat-resistant plastic	60% will be sold domestically
Source: MTO

Uzbekistan has the advantage that its gas is very lean, insomuch that it doesn’t contain much contamination from longer carbon chains and so is ideal for conversion into methanol, the basic feedstock for MTO.

In addition, ArkChemical is a joint venture between Saneg and the state-owned energy champion, Uzbekneftegaz, that will add a naphtha cracker unit to the complex that uses synthetic naphtha as a feedstock to produce polymers. ArkChemical’s investment cost is an estimated $1.1bn and will process some 430,000 tpy of naphtha to produce 280,000 tpy of high density polyethylene and 100,000 tpy of polypropylene.

A total of ten units are contained on MTO’s relatively compact 225ha site that can easily be expanded in the future.

It has taken five years to go from drawing board to breaking ground construction of the plant has now begun and will take about two years to complete before it comes online sometime in 2026, according to Ruslan Navruzov, the technical director.

The MTO will be a full cycle plastics production complex based on methanol. It is being entirely funded by private investments, not from the budget. Private companies enjoy significant tax breaks and other perks as part of the Karakul Free Economic Zone, according to Bakhodur Khafizov, the CEO of the Karakul FEZ, which was established in 2021 to provide a home to the MTO plant.

“The Karakul FEZ is a cluster model: the plant processing natural gas into polymer raw materials and then into high added value products are all concentrated in one place,” says Khafizov. All the technology in the plant is being sourced from abroad and will be used under licence from international companies.

On the wall of the presentation centre, one of the few buildings that have already been completed, a quote from the president is transcribed on the wall of the centre: “Building a new Uzbekistan and laying the foundation for a third renaissance.”

The plastics that will be produced will mostly go to meet domestic demand in the food processing, packaging, construction and automotive sectors, another of Uzbekistan's industrial strengths, with the other half being exported to markets like China, Turkey and the other Commonwealth of Independent States (CIS) countries.

Today the main site is little more than a 400-hectare patch of earth, although the first warehouses have gone up and pipe-making equipment for the plant has been imported and installed on the main site. However, a whole logistics and support centre is already functioning right next to site with warehouses and storage areas, customs post, railroad access, gantry cranes, reinforced concrete and asphalt plants.

The total cost of the MTO is estimated at $3.3bn with another $700mn invested in the free economic zone development, but will generate an estimated $14bn over 25 years in revenues when it is online and create about 5,000 jobs. At the same time, it will reduce the country’s plastics import bill by some $500mn a year and earn another $350mn from exports, says Khafizov.

The plant will also get its own 500-MW solar-powered power station as well as being connected to the Uzbek grid. Uzbekistan has become the green energy leader in Central Asia, capitalising on its copious sunshine and wind resources.

The plant will consume 1.3bcm of gas a year (the whole free economic zone will consume 1.9bcm of gas) and be connected to the domestic gas network. The country has suffered from a gas deficit in recent years that has caused an energy crisis in the last two winters, but a deal signed with Russia at the end of last year will reverse the flow of Soviet-era pipelines and import Russian gas to make up the shortfall.

The MO plant will also need 3,500 cubic metres of water a year that will come from the nearby Amu Bukhara canal, as well as getting a new dedicated railway line to ship the finished product to customers around the world.

Partners

The project is owned by Uzbekistan’s leading private energy company Saneg that will supply the 1.3 bcm of feedstock gas per year. The EPC general contractor is Enter Engineering, which has wide experience in heading major industrial and infrastructure projects. There are also half a dozen more partners that are providing design, environmental and legal advice.

The design and consulting partners include: John Wood Group Plc (UK), Topsoe (Denmark), Koch Industries Inc. (US), Chemtex Global Corp. (US), Scientific Design (US), Versalis (Italy), Sinopec (China) and Grace Catalysts Technologies (US).

The design and technical processes are already finished, and the detailed 3D model design phase is close to completion. The land plot is also already being levelled and the first warehouses and pipe workshops have already been built. Construction of the first chemical units will start in about June.

A number of production partners have already signed up to the project and joined the Karakul FEZ to make materials they need for their various industries: Karakulkimyo (fertilisers), Urgaz (flooring and covering), Merganteks (textiles), SAG (flooring and carpeting) and Vero (construction supplies).

There is a lot of upside to domestic demand. A survey by the government on plastics use in Uzbekistan found that the consumption was: 5.8kg per capita per annum for PE; 5.3 for PP; and 4.4 for PET.

Those are all multiples lower for use in the most advanced Western economies. For example, even in Turkey the consumption of PP is 23kg per capita per annum according to Boston Consulting group.

State of play

While the site remains little more than a field in the desert, construction work is well in hand and the land has been levelled and prepared for construction of the chemical units that is about to start.

The site is already well served with a nearby rail terminal and water in the Amu Karakul canal. And there is a sizable town nearby that will provide most of the labour, although a worker’s village is being constructed. Specialists will be hired in and accommodated at the site in the village too.

Procurement orders have already gone out for the large specialist pieces of machinery and the 314 tonne reactor has already been made in India by Larsen&Toubro and delievered. Another 500-tonne reactors made by China’s Sinopec – the first time it has made a reactor outside China – is on order and will be ready soon, says technical director Navruzov.

For the next stage the smaller sub-critical equipment is now in process and will be arriving over the next 12 months before main construction work starts in July and August, according to Navruzov.