UPDATE 2-Russia and Uzbekistan launch work on nuclear power plant

Russia and Uzbekistan began preliminary work on Friday on the first Uzbek nuclear power plant project which Moscow estimates will cost $11 billion.

The plant, to be largely financed by a soft loan from Russia, will allow Uzbekistan to use more of its natural gas for other purposes such as chemicals production or exports.

Russian President Vladimir Putin and Uzbek President Shavkat Mirziyoyev pressed a symbolic button together at a ceremony in a conference hall in Tashkent to mark the start of geological surveying to decide on a location for the facility.

Uzbekistan expects to pour first concrete no earlier than 2020 because of the project's complexity. The two-block, 2.4-gigawatt plant is expected to start producing power in 2028.

Today, most electric power in Uzbekistan is generated by gas turbines, but the Central Asian, formerly Soviet republic says it wants to use its large natural gas reserves more efficiently and extract more added value from them.

Tashkent signed agreements with Gazprom and several other Russian companies aimed at exploration and development of a few new hydrocarbon deposits as well as building a new chemical plant.

Producing the same amount of energy as a nuclear power plant using modern gas turbines would consume over 3.5 billion cubic metres of gas a year, according to Jurabek Mirzamahmudov, head of Uzbekistan's nuclear energy agency UzAtom.

"This is feedstock for one petrochemicals plant which could produce half a million tonnes of polymers," he told reporters this week.

Uzbekistan also exports gas to Russia and China.

Mirzamahmudov said it was possible Uzbekistan would add two more blocks to the plant in the future, doubling its capacity.

So far, however, the cost is unclear even for the first two blocks. Moscow has put it at $11 billion, but Mirzamahmudov said talks on the matter would start next year and Tashkent hoped the figure could be reduced.

And, although fuel will make up less than a tenth of the final energy cost, it could also be made cheaper by using a tolling scheme where Uzbek-mined uranium would be processed by Russia, officials say. 

(With inputs from agencies.)