Category Archives: Central Asia & South Caucasus News

Azerbaijan’s energy company to build Malta gas power station

JUNE 5 2016 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR said it will start building a gas-fired power station, fed by liquefied natural gas (LNG), in Malta by the end of year, ending years of delays for the project.

ElectroGas will build the 215MW LNG-to-power plant at the Delimara port, on the eastern Maltese coast, and will be its exclusive gas supplier. Switzerland-based SOCAR Trading, Germany’s Siemens and US-based General Electric own ElectroGas.

Media quoted SOCAR representatives as saying that “the facility will be commissioned before the end of the year.” They did not say how much it would cost to build, although Maltese media have speculated between $500m and $1b.

In effect the site is a large LNG terminal with a power plant attached. Malaysia’s Bumi Armada, an offshore services company, is building the $300m LNG storage facility at Delimara in Q3 2016. The floating terminal will have a capacity of around 95 tonnes of LNG.

Maltese media has repeatedly attacked the government for the delays in the commissioning of the power plant. Malta needs to boost its power generation capacity.

Earlier in 2015, Malta’s Auditor General launched an investigation into potential abuse of power by energy minister Konrad Mizzi, who had allegedly interfered in the purchase of fuel from SOCAR.

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(News report from Issue No. 284, published on June 10 2016)

Gunmen target Kazakhstan

ALMATY, JUNE 5 2016 (The Conway Bulletin) — An estimated two dozen gunmen attacked two arms shops and a police post in Aktobe, northwest Kazakhstan, killing at least six people, attacks that Kazakh officials quickly linked to Islamic militants.

Four gunman were also killed in the initial attacks and another 14 were killed over the next four days as security forces hunted the group.

Kazakh President Nursultan Nazarbayev called a national day of mourning for June 9 and ordered security forces across the country to mobilise to a high level of alert.

“According to the information that we possess, this terrorist act was organised by supporters of radical pseudo-religious movements. They received their instructions from abroad,” he said in a statement on June 8. Kazakh authorities have previously used this terminology as code for Islamic militants.

These are the worst attacks in Kazakhstan’s 25 years of independence from the Soviet Union. They also come at a highly sensitive time with the economy performing poorly mainly because of low oil prices and unrest growing amongst ordinary Kazakhs. There is also a growing sense of unease that Mr Nazarbayev hasn’t effectively organised a succession, creating a potential leadership vacuum.

There have been no claims of responsibility from any groups for the attacks. Mr Nazarbayev blamed the attacks on people who wanted to destabilise the government.

“In countries where these revolutions succeeded, there is no longer a working state and stability, only rampant poverty and banditry that create conditions for the emergence of extremists and terrorists,” he said.

If confirmed that Islamic militants were behind the attacks, this will be Mr Nazarbayev’s worst nightmare. Security forces have been worried for at least half a decade that Islamic militant recruitment in the west of the country, which has a high proportion of frustrated young men, was rising. Links have developed between the anti-Russia insurgency in the North Caucasus and west Kazakhstan and also between the radical group ISIS in Iraq and Syria and Kazakhstan.

Some analysts have said, though, that the attackers may have been organised from within by disgruntled members of the Kazakh elite who want to destabilise the government.

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(News report from Issue No. 284, published on June 10 2016)

Kazakh court releases former mayor of Karaganda on parole

JUNE 9 2016 (The Conway Bulletin) — A court in Kazakhstan released on parole Baurzhan Abdishev, the former akim (mayor) of Karaganda in central Kazakhstan. Abdishev was arrested in September 2014 on charges of abuse of power and participation in organised crime. Earlier in May, a Kazakh judge had proposed that Abdishev serve the remainder of his 5-year sentence in his house in Astana.

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(News report from Issue No. 284, published on June 10 2016)

Kyrgyz court opens lawsuit against Atambayev

JUNE 9 2016 (The Conway Bulletin) — A Kyrgyz court opened a lawsuit against President Almazbek Atambayev, lodged by human rights activists Tolekan Ismailova and Aziza Abdyrasulova, whom Mr Atambayev had called “saboteurs” in May. Ms Ismailova and Ms Abdyrasulova want Mr Atambayev to publicly apologise and pay 2m soms ($29,300) in damages.

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(News report from Issue No. 284, published on June 10 2016)

Russia and Turkmenistan discuss gas deal

MAY 31 2016 (The Conway Bulletin) — Russia’s gas giant Gazprom said it may resume gas imports from Turkmenistan, less than a year after bad- tempered rows over prices led to the Kremlin scrapping shipments of gas.

Alexander Medvedev, deputy chairman at Gazprom, said the parties were still in talks and it was too early to say whether a settlement can be reached.

“There is a window of opportunity. We are ready to negotiate, but, unfortunately, there is no clear road- map,” Mr Medvedev told the press.

Even just the decision to negotiate signals a U-turn by Russia and Turkmenistan over both their gas policies and relations in general.

At one point during the various arguments in 2015, Gazprom took the Turkmen government to court to try to force it to reduce gas prices.

China has become Turkmenistan’s favoured destination for its gas exports since a pipeline connection was completed in 2009.

But now, facing delays in the section of the pipeline that crosses Kyrgyzstan, China has pushed back its investment plans for the giant Galkynysh gas field in Turkmenistan.

This is likely to frustrate Turkmenistan, which bet heavily on China as an alternative to Russia, and could provide an opportunity to resume gas trade with Gazprom.

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(News report from Issue No. 283, published on June 3 2016)

Centerra sues Kyrgyzstan

BISHKEK, MAY 30 2016 (The Conway Bulletin) — Centerra Gold, the Toronto-listed company that owns the Kumtor gold mine in east Kyrgyzstan, lodged arbitration proceedings against the Kyrgyz government, pushing their already-strained relationship to breaking-point.

The company laid out three areas for its litigation challenge. It said it would challenge both an environmental claim against it and a charge by the Kyrgyz prosecutor that a $200m dividend paid in 2013 was illegal. Centerra also said it suspected that a delay in gaining official approval for its 2016 mining plan was designed to frustrate it for political reasons.

“The company will continue to contest all of the claims in international arbitration in accordance with the 2009 Restated Investment Agreement,” Centerra said in a statement.

It filed the arbitration case with the Stockholm Chamber of Commerce, a favoured destination for dispute resolution for projects in Central Asia. Earlier this year, the Stockholm court ruled in favour of an Estonian building company against the Kazakh foreign ministry.

Centerra’s reference to the 2009 agreement refers to the renegotiation of the contract. This boosted Kyrgyzstan’s share in Centerra to 32% from just under 16%. Centerra, in turn, fully owns the Kumtor Gold Company that operates the mine.

Kyrgyzstan is the largest share- holder in Centerra but has said that it wants to take a larger, more direct stake in the country’s biggest industrial unit.

And it appears to have been applying pressure on Centerra to force the issue. In March, Kyrgyz police raided the Kumtor Gold offices in Bishkek, looking for evidence of wrongdoing.

And a court in Bishkek has also been slapping down fines against Kumtor Gold over environmental damage and the government has delayed signing off on 2016 production plans.

This appears to be the start of a showdown in Kyrgyzstan’s mining sector. Once proceedings begin, lawyers and prosecutors, managers and ministers will confront each other in a legal battle that will ultimately decide control of the Kumtor mine and Kyrgyzstan’s economic output. Kumtor generates around a tenth of Kyrgyzstan’s GDP.

Investors also appeared to cheer the arbitration move by Centerra Gold’ pushing its share price up by 1.6% the day after the announcement to 6.86 Canadian dollars.

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(News report from Issue No. 283, published on June 3 2016)

Germany MPs recognise Armenian genocide

JUNE 2 2016 (The Conway Bulletin) — Germany’s parliament voted to recognise the 1915 killings of up to 1.5m Armenians by Ottoman Turks as genocide, immediately angering Turkey which recalled its ambassador from Berlin.

The vote comes at a sensitive time for German Chancellor Angela Merkel who is under pressure over her deals with Turkey to try to reduce the number of migrants heading to Europe from Syria, the Middle East and Afghanistan.

It’s also a reminder of just how contentious the Armenia genocide issue is. Gaining recognition for the deaths as a genocide is central to Armenia’s foreign policy. Turkey denies the charges and has said the deaths were part of the chaos of World War I. Only around 20 states have so far recognised the genocide, including France and Russia.

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(News report from Issue No. 283, published on June 3 2016)

Stock market: Centerra Gold

JUNE 3 2016 (The Conway Bulletin) — Centerra Gold shares in Toronto usually closely follow the ups and downs of spot gold prices, but a recent escalation of the spat with the Kyrgyz government has altered this trend.

Investors welcomed the strong verbal reaction by the company to a raid in a Centerra-owned office in Bishkek at the end of April and gave the stock a boost in the first weeks of May.

Since then, though, a number of environmental fines have dented confidence. It’s been a rocky ride with the share price bouncing around depending on the various statements issued by each side. At the start of the week, as this graph shows, Centerra’s share price rose on news that it would start arbitration proceedings against the Kyrgyz government.

Decreasing gold prices, as the graph shows, now add to the mix and with a legal battle with Kyrgyzstan on the horizon, analysts have become increasingly pessimistic on Centerra’s target price.

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(News report from Issue No. 283, published on June 3 2016)

Kazakhstan to take majority control of major uranium mine

ALMATY, MAY 31 2016 (The Conway Bulletin) — Canada’s Cameco, the world’s largest publicly traded uranium company, said it will cut its stake in its joint venture with Kazakhstan’s state-owned Kazatomprom, giving the Kazakh government majority control over one of its biggest uranium deposits.

Under the new agreement Cameco and Kazatomprom will extend their partnership in the Inkai joint venture until 2045, although the share split will switch from 60:40 in Cameco’s favour to 60:40 in Kazatomprom’s favour.

Inkai is one of the most important uranium deposits in Kazakhstan.

Cameco’s CEO Tim Gitzel said in a statement: “The agreement advances our strategy to mitigate the risk of today’s uncertain uranium market and positions us to maximize returns when the market recovers.”

Under the plan, also welcomed by Kazatomprom chairman Askar Zhumagaliyev, Inkai will double uranium production to 4,000 tonnes and could potentially build a new uranium refinery.

In its annual report, Cameco said it was surprised by continued low uranium prices.

The deal also comes a few months after Kazakh President Nursultan Nazarbayev hinted he wanted more state control over the uranium sector.

“It is necessary to either ensure that [Kazatomprom’s partners] meet their obligations or look into reclaiming those assets in the interests of our state,” Mr Nazarbayev said.

This is in line with policy in other sectors, such as oil and gas where Mr Nazarbayev also wants to extend control.

Kazakhstan, which is the world’s largest uranium producer, is faced with a dilemma. It needs the expertise of large uranium companies such as Cameco, France’s Areva and Japan’s Sumitomo to become a safe and reli- able hub for nuclear fuel, but it also wants to gain more control of an industry it had widely privatised in the first years after independence.

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(News report from Issue No. 283, published on June 3 2016)

Azerbaijan’s energy company reorganises its assets in Turkey

JUNE 1 2016 (The Conway Bulletin) — SOCAR Turkey Enerji, a subsidiary of Azerbaijan’s state-owned energy company, has said it wants to buy stakes in a pipeline and a lubricants company and sell a stake in a refinery, in a major shake up of its operations in Turkey.

SOCAR Turkey Enerji said it is interested in buying OMV Petrol Ofisi, a subsidiary of the Austrian energy company that produces fuel and lubricants in Turkey. To secure the deal, the Azerbaijani company will have to beat competition from Chinese and Japanese companies.

“SOCAR has an interest in this deal. We are waiting for the company to submit information on these assets,” Zaur Gakhramanov, the company’s head, told local media. He also said his company wants to buy a 7% stake in TANAP, the Trans-Anatolian gas pipeline, from SOCAR, which owns a 58% stake in the project.

Perhaps adding to the company’s expansion plans, Mr Gakhramanov also said that SOCAR Turkey Enerji plans an IPO in 2020 for 49% of its shares. He did not say where the company’s shares would list.

But this year SOCAR Turkey Enerji has also looked to sell.

In May, it said it wanted to sell off its shares in Turkey’s petrochemical complex Petkim. In March SOCAR Turkey Enerji cut its share in Petkim from 8.07% to 5.32%. SOCAR Turkey Petrokimiya, another SOCAR subsidiary, still owns 51% of the project.

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(News report from Issue No. 283, published on June 3 2016)