Category Archives: Central Asia & South Caucasus News

inApril makes deal with Kazakhstan-based Geo Energy

JUNE 30 2016 (The Conway Bulletin) – inApril, a Norwegian oil and gas service company, said it had reached a deal with Kazakhstan-based Geo Energy Group to supply it with a seismic acquisition system. The deal, worth up to $30m, according to inApril, will improve the technological footprint of Geo Energy Group, which provides seismic assessments of oil and gas basins in offshore sections of the Caspian Sea.

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(News report from Issue No. 287, published on July 1 2016)

Kazakhstan and Iran to build refinery

JUNE 27 2016 (The Conway Bulletin) — Kazakhstan and Iran will build a new refinery in the Iranian Caspian Sea port of Amirabad, Golestan,specifically to process Kazakh oil for export. It is unclear how much the refinery is going to cost to build and when it will be operational but it is probably the biggest single joint venture between the two countries since many Western sanctions on Iran were lifted in January.

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(News report from Issue No. 287, published on July 1 2016)

Georgia is the best route, says Iran

JUNE 28 2016 (The Conway Bulletin) — Iran’s oil refining and distribution company said that it views Georgia as the best route to send its various petroleum products to Europe. Iran and Georgia have developed increasingly close economic and business relations over the past few years and there is now relatively high number of Iranian businesses and nationals living in Tbilisi. They had viewed Georgia as a potential route around sanctions.

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(News report from Issue No. 287, published on July 1 2016)

Brexit knocks economies in Kazakhstan & Georgia

JUNE 30 2016 (The Conway Bulletin) — Brexit, Britain’s vote to leave the EU in a referendum on June 23, pushed down stock markets, commodities and currencies worldwide, including in South Caucasus and Central Asia where politicians and business leaders warned of problems ahead.

Kazakhstan was hit by both currency instability and the sudden drop in oil prices, which fell below the $50/barrel threshold it had recovered to earlier this year after the rout of 2014 and 2015.

Uzakbai Karabalin, Kazakhstan’s former oil minister and now deputy chairman of the oil and gas lobby group KAZENERGY, said the government will have to revise down the baseline for oil prices in the national budget this year.

“[Brexit] has already affected oil prices,” he said. “The first response was a decline. Now the economic base price is $50/barrel.”

Previously, the government had said the baseline for this year could have grown to $60/barrel, so a drop to $50/barrel is a pessimistic assessment of the impact of Brexit.

Georgia, less impacted by low oil prices, felt the Brexit effect on its currency, the lari. The lari has fallen by 4.5% since June 23 and Dimitry Kumsishvili, the economy minister, blamed the Brexit result.

“This is most likely a one-off that is directly connected to the UK’s decision to quit the European Union. Of course, this immediately affects our currency,” Mr Kumsishvili said.

He warned that the impact of Brexit had only just started to feed through into the world’s economy and that more economic shocks in the region were likely.

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(News report from Issue No. 287, published on July 1 2016)

Kazakhstan wins UN Security Council seat

ALMATY, JUNE 28 2016 (The Conway Bulletin) — The UN General Assembly elected Kazakhstan to hold a non- permanent seat at the UN Security Council, with 138 votes in favour out of 193, a major PR coup for President Nursultan Nazarbayev who coveted the position and ordered a sustained campaign to win it.

And Mr Nazarbayev quickly hailed the news as a success.

“Kazakhstan’s election as a non- permanent member of the UN Security Council is a historic achievement. This is not only our country’s success but that of the entire sub-region of Central Asia,” he said.

Kazakhstan will hold the seat at the 15-member Security Council for two years, from Jan. 1 2017. It is the first country in Central Asia to hold the position. Azerbaijan held anon- permanent seat at the UN Security Council in 2012/13.

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(News report from Issue No. 287, published on July 1 2016)

Lithuania refuses Shalabaev extradition for Kazakhstan

JUNE 28 2016 (The Conway Bulletin) – In a snub to the Kazakh government, a court in Lithuania said that it won’t order the government to detain and extradite the brother-in- law of Mukhtar Ablyazov, the billionaire former opposition leader. Syrym Shalabayev is the brother of Ablyazov’s wife. He was given asylum in Lithuania. Ablyazov is in French custody fighting extradition charges to Kazakhstan for allegedly stealing $5b when he was chairman of BTA Bank.

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(News report from Issue No. 287, published on July 1 2016)

Kazakh Air Astana starts flights to Iran

JUNE 30 2016 (The Conway Bulletin) – Kazakhstan’s flagship carrier Air Astana said it started direct flights to Iran, after it had delayed starting the route in May. From June 30, Air Astana will fly three times a week between Almaty and Tehran. Kazakhstan and Iran have tried to boost business ties since western countries lifted sanctions on Iran in January.

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(News report from Issue No. 287, published on July 1 2016)

Armenia’s CB cuts interest rates

JUNE 28 2016 (The Conway Bulletin) — Armenia’s Central Bank cut its key interest rate to 7.5% from 7.75% because of continued deflationary pressure on its economy. Armenia’s interest rate is now at its lowest level for 18 months. It had aggressively increased its interest rate to prop up its currency. Now prices are falling and the economy is slowing, forcing the Central Bank to try to stimulate business and economy activity.

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(News report from Issue No. 287, published on July 1 2016)

Editorial: Military conscription

JULY 1 2016 (The Conway Bulletin) — Georgia’s decision to scrap conscription for its army comes as no surprise. It has been moving in this direction for some time. The Georgian army is a modern Western army that has fought battles in Iraq and Afghanistan alongside members of NATO, a club it longs to join.

What is more critical is the timing of the announcement and the way it was delivered. Tina Khidasheli, Georgia’s defence minister, took it upon herself to cancel conscription from 2017. She sidestepped a debate in parliament and also presidential permission. It was a unilateral decision.

Ms Khidasheli is a member of the Republican Party, part of the Georgian Dream coalition government. The Republican Party, though, has said that it will fight a parliamentary election in October outside the government coalition. The problem with this approach, though, is that while it sets the Republican party apart it has to improve its polling, hovering around 1%.

The decision to scrap conscription in the Georgian army is a historic first for Central Asia and the South Caucasus. The timing, though, should perhaps be seen against the backdrop of an unpredictable election.

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(Editorial from Issue No. 287, published on July 1 2016)

Azerbaijan focused Anglo Asian aims to cash in on gold price rise

JUNE 29 2016 (The Conway Bulletin) – Looking to cash in on a spike in gold prices triggered by Brexit, Azerbaijan- focused miner Anglo Asian said it would sell the remainder of its 2016 production as futures.

Gold prices have risen 5% in the past week because of thinning confidence linked to Britain’s referendum last week which voted unexpectedly to leave the European Union, in a so-called Brexit, triggering a wave of uncertainty across the world.

The Anglo Asian deal fixed a price corridor of $1,200-$1,426/ounce for their future gold production for the next six months.

Reza Vaziri, Anglo Asian’s CEO, said that the deal, which could secure between $21.6m and $25.7m, will be beneficial for the company, which has had to cope with low gold prices over the past few months. It accumulated debt over the past few months which it now has to pay off.

“This is a win-win transaction for us,” Mr Vaziri said.

“Whilst protecting the downside in the current volatile gold market over the coming six months given Anglo Asian’s debt service payments, we also enjoy considerable exposure to any further increase in the price of gold during this period.”

Spot gold prices closed at $1,321.9/ounce on June 30 compared to $1,257.6/ounce on June 23.

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(News report from Issue No. 287, published on July 1 2016)