Tag Archives: Azerbaijan

BA cuts UK- Azerbaijan route as demand falls

MARCH 17 2016 (The Conway Bulletin) – British Airways will cut its route to Baku from April 29 because it has become unprofitable, another indication of the severity of the economic downturn that has hit Central Asia and the South Caucasus in general and Azerbaijan in particular.

Baku is BP’s major regional hub and British Airways had been flying six times a week direct to Baku from Heathrow. Its decision to cut the route, which has been serviced by a British airline since 1995, further cuts the region off from Europe.

Over the past three years, British Airways has cut routes to Bishkek, Tbilisi and Almaty. By stopping flights to Baku it pulls back from the region altogether.

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(News report from Issue No. 272, published on March 18 2016)

British Airways cuts flight to Azerbaijani capital, its final link with region

MARCH 17 2016 (The Conway Bulletin) – British Airways will cut a 21-year-old route when it drops its six-times-a- week service to Baku from London.

It said that poor demand, linked to the sharp economic downturn that has engulfed the region in the past 18 months, has made the route unprofitable.

“We have taken the decision to suspend the London Heathrow to Baku route as it is no longer commercially viable,” a statement read.

“The final service from Heathrow will be on April 29, 2016 and the final service departing Baku will be on the same day.”

The London-Baku route is the last remaining BA flight into Central Asia and the South Caucasus.

It has slowly dropped the region’s capitals as destinations.

Yerevan and Bishkek were dropped in 2012, Tbilisi in 2013 and Almaty in 2014.

But symbolically, dropping Baku is more serious than any of the others. Baku is the centre of BP’s operations in the region which has always driven demand.

It was also a route that BA first flew in 1995, four years after the break up of the Soviet Union. It handed over to British Mediterranean Airways in 2003 before BMI took it on in 2007. BA then reclaimed the route in 2012.

As BA has dropped routes to Central Asia and the South Caucasus, though, regional airlines have stepped in. Air Astana now boasts it is the only airline that flies directly between London and Almaty/Astana.

Soon, Azerbaijan Airlines will be able to give the same boast on flights to Baku.

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(News report from Issue No. 272, published on March 18 2016)

Azerbaijan and Iran swap prisoners

MARCH 15 2016 (The Conway Bulletin) – Azerbaijan handed over five Iranians it was holding in jail in return for six Azerbaijanis imprisoned in Iran, the latest prisoner swap between the two neighbours. Relations between Azerbaijan and Iran have improved dramatically over the past couple of years. As well as swapping prisoners, Azerbaijan has been building relations with Iran and signing deals in various sectors including transport and power.

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(News report from Issue No. 272, published on March 18 2016)

Azerbaijan’s president praises TANAP

MARCH 15 2016 (The Conway Bulletin) – At a meeting with Azerbaijani President Ilham Aliyev in Ankara, Turkish President Recep Tayyip Erdogan said that the TANAP gas pipeline project running from the Turkey-Georgia border to the Turkey-Greece border was one of the country’s most important projects. TANAP forms the middle section of the so-called Southern Gas Corridor that will pump gas from the Caspian Sea to Europe. The TANAP shareholders are Azerbaijan’s SOCAR (58%), Turkey’s BOTAS (30%) and BP (12%).

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(News report from Issue No. 272, published on March 18 2016)

Azerbaijan’s President releases political prisoners to appease Europe

MARCH 17 2016 (The Conway Bulletin) – In a move that caught observers by surprise, Azerbaijani president Ilham Aliyev released 148 prisoners, including a dozen or so political prisoners.

Observers, though, said that Mr Aliyev may have been feeling the heat from a sharp drop in the economy and growing unease among Azerbaijanis over accelerating inflation and a 50% cut in the value of the manat currency. They said that he may have wanted to extend a peace offering to the European Union, a vital trade partner, with which he has quarrelled over human rights.

Among those released were human rights campaigners Taleh Khasmamadov, Hilal Mammadov and Rasul Jafarov, opposition activist Nemat Panahli, exelection watchdog chief Anar Mammadli and journalist Parviz Hasimov.

They had all been arrested and jailed in the past three years for holding illegal weapons, drugs dealing or financial crimes.

Their supporters say that these charges have simply been trumped up to crackdown on dissenters in politics and the media.

Khadija Isamayilova, a journalist who focused on corruption and was jailed last year in a case that attracted worldwide media attention, was not pardoned.

On the same day that the prisoners were released, the deputy head of the Presidential Administration, Novruz Mammadov, was briefing Azerbaijani media about improved relations with the European Union.

He said that a new document bringing together the EU and Azerbaijan was likely to be signed soon.

“I have no doubt about that, because, recently, the EU commissioners for foreign affairs and energy issues visited Azerbaijan and expressed their position on the essence of the relations,” the Trend news agency quoted him as saying.

One of the more significant visits by EU officials over the last few months was Federica Mogherini, the EU’s foreign affairs commissioner. She talked up relations between Azerbaijan and the EU.

The European Union is so important to Azerbaijan because it is on the brink of becoming its biggest market for gas from the next phase of its Caspian Sea development.

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(News report from Issue No. 272, published on March 18 2016)

Azerbaijan’s IBA rebrands

MARCH 14 2016 (The Conway Bulletin) – The International Bank of Azerbaijan, the country’s largest lender, changed its logotype, colour and slogan in an effort to boost its domestic and international image. The IBA posted poor financial results last year. Its former CEO Jahangir Hajiyev was arrested in December.

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(News report from Issue No. 272, published on March 18 2016)

Editorial: British Airways and Azerbaijan

MARCH 18 2016 (The Conway Bulletin) -The economic downturn continues to hit Central Asia and the South Caucasus with British Airways now cancelling its London-Baku service.

But whether BA needs to quit the route altogether is questionable. Airlines keep a diversified portfolio of route because it is near impossible to second guess which routes will be profitable in a few year’s time.

The decision took many by surprise because of the strong presence of British business in Azerbaijan, most notably BP.

As oil prices fell dramatically in the past 20 months, airline companies have rallied on cheap fuel, but have also struggled to maintain links to countries negatively affected by the crisis.

In 2012, British Airways cut its route to Yerevan, the following year it cancelled regular flights to Bishkek and Tbilisi. Last October, the company quit its London-Almaty route.

The crisis, aside from hitting government budgets and people’s wallets, has contributed to cutting off further the region from the West.

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Editorial from Issue No. 272, published on March 18 2016)

Zenith signs agreement with Azerbaijan’s SOCAR

MARCH 17 2016 (The Conway Bulletin) – A subsidiary of Canadian oil company Zenith Energy signed a production sharing agreement with Azerbaijan’s state-owned energy company SOCAR to develop three onshore oil fields. Zenith Aran Oil and SOCAR had started negotiations last year. Zenith will have an 80% share in the Muradkhanli, Jafarli and Zardab fields for the next 25 years. SOCAR will retain the remaining 20%.

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(News report from Issue No. 272, published on March 18 2016)

Azerbaijan’s oil exports drop

MARCH 17 2016 (The Conway Bulletin) – Azerbaijan exported 5.2m tonnes of oil in January and February, down from 5.5m tonnes in the same period last year, official customs data reported. Azerbaijan is reliant on oil exports to fund its budget. The drop in oil prices has hit its economy hard, forcing the government to cut budgets. The problem for Azerbaijan is that a lot of its oil fields are aging.

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(News report from Issue No. 272, published on March 18 2016)

Business comment: Oil Rebounds

MARCH 18 2016 (The Conway Bulletin) – In less than two months, Brent oil prices shot up by around 40%, giving oil companies a boost after months of downward pressure.

According to industry specialists, oil prices should remain within the current corridor of $35-$40/barrel until the end of the year, with an upward outlook (see chart above).

An Asian energy markets expert told The Conway Bulletin confidentially that he believes oil prices might grow back up to three figures by 2020, a long-term bullish statement.

But in the meantime, oil- dependent economies in the South

Caucasus and Central Asia will continue to suffer.

Despite the rebound in oil prices, most of the fields in Azerbaijan and Kazakhstan will operate at a loss this year as well. And there is only a slim chance that the two Central Banks in Baku and Almaty will decide to weaken their currencies further in order to favour the export-oriented sectors of their economy.

Tengizchevroil, the consortium in charge of the Tengiz oil field in Western Kazakhstan has delayed a final investment decision on its expansion project. BP has said its fields in Azerbaijan will not show an increase in production in 2016.

The gas sector will also be impacted by oil prices in the medium term, as gas prices will also shrink, albeit moderately, for Azerbaijan, Turkmenistan and Uzbekistan.

The decline of oil and gas prices has now almost reached its two- year anniversary and exporters will feel an increasingly stronger pressure from importers to give them subsidies and discounts, given the regional economic downturn that is affecting all countries in the region.

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(News report from Issue No. 272, published on March 18 2016)