JUNE 6 2016 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR said its Romanian subsidiary SOCAR Petroleum made a profit in 2015 for the first time since 2011 despite a fall in revenues. SOCAR Petroleum owns several filling stations across Romania. Low oil prices reduced total revenue at SOCAR Petroleum but also gave it a higher profit margin on sales.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 6 2016 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR said it aims to increase oil and gas production at several offshore fields in the Caspian Sea. The company said it will build nine new platforms to drill 81 wells. CEO Rovnag Abdullayev said a new gas platform in the Guneshli block will be the first to be entirely designed and built by SOCAR.
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(News report from Issue No. 284, published on June 10 2016)f
JUNE 9 2016 (The Conway Bulletin) — The presidents of Armenia, Azerbaijan and Russia will meet in St. Petersburg later in June for a tripartite negotiation on the Nagorno-Karabakh conflict, a source in the Russian foreign ministry told local media. Azerbaijan’s Ilham Aliyev and Armenia’s Serzh Sargsyan met in Vienna in May and agreed to maintain the ceasefire over the disputed Nagorno-Karabakh region where clashes erupted at the beginning of April.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 10 2016 (The Conway Bulletin) — A wave of mergers, acquisitions and privatisations has hit Central Asia and the South Caucasus.
At The Bulletin, we’ve extensively covered the Kazkommertsbank buyout over the past two years. But elsewhere, from Azerbaijan to Uzbekistan, the banking sector is in a restructuring phase.
A renovation of the financial sector had become crucial after an extended economic downturn hit the money markets, from currency exchange rates to loan sustainability. What’s more, low oil prices, besides depressing budget capacity and economic growth, have hindered investment and project financing.
From small local lenders to country-wide behemoths, banks across Central Asia and the South Caucasus have equally suffered, albeit for different reasons.
And since the beginning of 2016, small quakes have shaken the sector.
In Azerbaijan, immediately after the sharp depreciation of the manat, middle and small-sized banks were unable to maintain the newly set capital ratio requirements, triggering failures and mergers.
This week a rather obscure deal involving an Uzbek bank and a German plastics manufacturer marked the beginning of the new privatisation era in Uzbekistan.
And of course, across the border in Tajikistan, we are now three weeks into the care-taking administration of the country’s second-largest bank.
This is both a stress test and an opportunity. 25-year-old countries cannot afford to have a banking crisis every decade. Dependent as they are on commodity prices and regional trade, they need to seize this occasion to build more reliable and stable foundations for their finance sector.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 6 2016 (The Conway Bulletin) — Electricity production in Azerbaijan shrank by 6.1% to 9.2b kWh last year, state-owned Azerenergy said in a statement. Power generation had decreased marginally in 2015 compared to the previous year. Electricity generation, especially from sources other than coal or gas, is one of the main priorities for Azerbaijan.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 6,7 2016 (The Conway Bulletin) — Azerbaijani President Ilham Aliyev travelled to Berlin on his first trip to Europe since releasing from prison a number of journalists and opposition activists often described by European Union leaders as political prisoners.
Mr Aliyev’s objective appeared to be to encourage German investment in Azerbaijan. He met with several business leaders and policymakers, including Chancellor Angela Merkel.
But Emin Milli, director of Meydan TV, an Azerbaijani opposition Berlin- based media outlet, said Azerbaijan needs loans to fill budget gaps created by a collapse in oil prices.
“With the fall of the oil price and the looming economic crisis which causes some socio-economic unrest in the country, the government needs more legitimacy among the public,” Mr Milli told the Conway Bulletin.
“They can’t get it through falsified elections, so they try to extend their influence abroad, through handshakes and photo opportunities with Western leaders, such as Angela Merkel or Barack Obama.”
He also said this may have been the motivation behind the release of investigative journalist Khadija Ismayilova last month.
The visit came four days after the German parliament recognised the 1915 mass killings of Armenians by Ottoman Turks as genocide. The move angered Turkey, but also prompted a harsh reaction in Baku, Ankara’s closest ally.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 4 2016 (The Conway Bulletin) — Donald Trump, the presumptive Republican party candidate for a presidential election later this year, has quietly ditched a real estate project in Azerbaijan that had been linked to an father-son combination allegedly connected to the Iranian military, the AP news agency reported.
Mr Trump had made the initial deal in Baku in 2013 with Anar Mammadov. His father Ziya Mammadov is a government minister and is also alleged to be linked to various money laundering schemes as well as to the Iranian military. Although some sanctions were lifted on Iran earlier in the year, it is still an offence to do business with the Iranian Republican Guard.
Mr Trump has not commented on the case although his staff have said that the project had been delayed because of economic conditions.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 6 2016 (The Conway Bulletin) — Investigations into corruption allegations at its subsidiaries in Central Asia has slowed a sale by Swedish telecoms operator Telia Company, formerly TeliaSonera, of its 59% stake in Netherlands-based holding company Fintur to Istanbul-based Turkcell, sources involved in the sale told Bloomberg News. Fintur is valued at $1b and owns telecoms subsidiaries in Kazakhstan, Azerbaijan, Georgia, Tajikistan, and Moldova.
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(News report from Issue No. 284, published on June 10 2016)
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)
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)
