Tag Archives: business

Turkmenistan discusses TAPI financing

MAY 21 2016 (The Conway Bulletin) — The Turkmen government said it has started negotiations with the Islamic Development Bank and other international financial institutions to open credit lines for funding the TAPI gas pipeline, which will pump gas to Pakistan and India through Afghanistan. Among potential backers, Turkmenistan has targeted Saudi Arabia and Japan. The pipeline, which will cost $10b and have a capacity of 33b cubic metres per year, is scheduled for completion in 2019.

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(News report from Issue No. 282, published on May 27 2016)

Mega Uzbek gas processing complex starts work

MAY 22 2016 (The Conway Bulletin) — The Ustyurt Gas Chemical Complex in Uzbekistan, bigger than any other petrochemical complex in Europe and Asia, officially started operating, marking a coming-of-age for the Uzbek-Korean joint venture that has built and will operate the plant.

The plant cost around $4b and took five years to build. Ustyurt will process around 4.5b cubic metres of gas per year. Uz-Kor Gas Chemical, a joint venture between state-owned

Uzbekneftegaz and South Korea’s largest petrochemical company Lotte Chemical, said that it has already received gas for processing.

At a ceremony to celebrate the event, Lotte Chemical, a subsidiary of South Korea’s Lotte Group, said this was a first step in their campaign to expand westwards.

“The completion of the complex will significantly help Lotte Chemical expand its business territories to Russia and North Africa as well Europe and Central Asia,” Lotte said in a statement.

Uzbek and South Korean PMs Shavkat Mirziyoyev and Hwang Kyoahn also attended the ceremony.

Uzbekistan is among the top 15 gas producing countries and considers the Ustyurt gas complex to be vital to its economic plans. It is also planning parallel investments to increase gas production at its ageing fields in Karakalpakstan, west Uzbekistan, where the Ustyurt complex is located.

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(News report from Issue No. 282, published on May 27 2016)

Kazakh bank’s profits fell by 33%

MAY 23 2016 (The Conway Bulletin) — Halyk Bank, Kazakhstan’s second- largest bank, said profits fell by 33% in Q1 2016, compared to 2015 due to a slowdown in lending. The bank said high interest rates at the beginning of the year had scared away consumers. Importantly, Halyk also said the proportion of bad loans in its portfolio increased to 11.7% from 9.1% in Q4 2015.

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(News report from Issue No. 282, published on May 27 2016)

Editorial: SOCAR’s moves

MAY 27 2016 (The Conway Bulletin) — It’s not yet clear whether SOCAR is now more downbeat or down-to-earth. The Azerbaijani state oil company has closed representative offices in three countries this week and is selling a stake in a petrochemical complex in Turkey. Cost-cutting, it seems, is high on the agenda as sustained low oil prices have hit revenues and hindered production growth.

But this week SOCAR has shown its bullish side as well. As we report in the Business News BP and SOCAR signed an agreement to jointly develop an offshore oil field. SOCAR also committed to building a new refinery in Georgia, a hub for Azerbaijani oil destined for customers in the West.

On the markets there is no sign that global oil prices, which nudged above $50/barrel for the first time this year on May 26, will shoot up again anytime soon.

SOCAR’s conservative approach to lavish spending on shiny offices around the world and its bullish plans for exploration and refining show that the company believes that the worst times are over, or nearly over, and it’s now time to look forward.

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(News report from Issue No. 282, published on May 27 2016)

Uzbekistan receives loan from World Bank

MAY 25 2016 (The Conway Bulletin) — The World Bank sent a $20m loan to Uzbekistan to fund the update of the cadastre system, through which the government registers properties. Outdated registers and complicated bureaucratic procedures, as well as rampant corruption and a lack of legal protection for companies, have kept Uzbekistan among the worst countries to do business in.

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(News report from Issue No. 282, published on May 27 2016)

Georgia to receive pipeline fees

MAY 20 2016 (The Conway Bulletin) — Georgia’s PM Giorgi Kvirikashvili said that he hopes to receive 1b cubic metres of gas annually as payment in-kind for the transit of Azerbaijani gas through Georgia via the Southern Gas Corridor. Azerbaijan will pump 16b cubic metres of gas through a network of pipelines, called the Southern Gas Corridor, to Europe. The project will be completed in 2019.

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(News report from Issue No. 282, published on May 27 2016)

Work starts in Georgia on world’s sixth largest hotel

BATUMI/Georgia, MAY 22 2016 (The Conway Bulletin) — The Georgian real estate developer Orbi Group said it has started construction work on a $120m hotel in Batumi called the Twin Tower, a sign that tourism and business on Georgia’s Black Sea coast is possibly rebounding.

The two 45-storey towers will hold 4,500 hotel rooms, making it the sixth largest hotel complex in the world when it is completed by the end of next year.

Batumi is Georgia’s main tourist destination and had been the site of mass redevelopment. The previous government of Mikheil Saakashvili had spent heavily improving Batumi but its fortunes had dived after the election of the Georgian Dream coalition government in 2012.

This lack of favour coupled with an economic downturn triggered by low oil prices stalled many of Batumi’s planned projects.

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(News report from Issue No. 282, published on May 27 2016)

Azerbaijan’s oil company sells Petkim shares

MAY 21 2016 (The Conway Bulletin) — SOCAR, Azerbaijan’s state oil company, said one of its Turkish subsid- iaries wants to sell its 5.32% stake in the Turkish oil and chemical complex Petkim for 70.9m lira ($33m) according to Bloomberg. In March, Socar Turkey Enerji reduced its ownership in Petkim from 8.07% to 5.32%. SOCAR Turkey Petrokimya still owns a 51% stake in Petkim.

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(News report from Issue No. 282, published on May 27 2016)

Azerbaijani miner posts record production

MAY 25 2016 (The Conway Bulletin) — Azerbaijan-based miner Anglo Asian posted a record production year in 2015, mining 72,000 ounces of gold, a 19% increase compared to 2014. The company’s revenues also grew by 15%, despite lower gold prices. Anglo Asian said it plans to produce even more gold in 2016 and plans to cut costs further thanks to the depreciation of the manat currency at the end of last year.

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(News report from Issue No. 282, published on May 27 2016)

Moody’s warns that Azerbaijani banks could go bankrupt

MAY 23 2016 (The Conway Bulletin) — Ratings agency Moody’s said that a number of Azerbaijani banks could soon default, on the same day that the government said the country’s largest lender had piled up an unsustainable amount of bad assets, painting a bleak picture for the country’s financial sector.

Problem loans and liquidity issues have dented the financial health of Azerbaijani banks since the Central Bank decided to float the manat currency against the US dollar, triggering a sharp depreciation in December last year.

“Several banks with B3 rating have high risk of default,” Petr Paklin, analyst at Moody’s Financial Institutions Group was quoted as saying.

Moody’s downgraded Bank of Baku, Unibank and Xalq Bank to B3 in January and it is now saying that these could default. All three are among Azerbaijan’s 10-largest lenders.

The country’s biggest bank, the International Bank of Azerbaijan, amassed overdue loans and other toxic assets over the past few months at such a rate that it triggered a comment, and possible help, from the government.

“The cleaning process of toxic assets from IBA’s balance sheet is underway,” Samir Sharifov, Azerbaijan’s finance minister told local media on May 20.

IBA has not yet published the latest figures on the share of non- performing loans in its portfolio, but analysts believe it is well above the 12% previously reported. Notably, IBA holds around half of all loans in the country.

Azerbaijan’s government, as IBA’s largest shareholder with a 54.9% stake, could decide to write-off overdue loans, effectively bailing it out. Clearly, Azerbaijan’s financial sector has suffered from the sustained low oil prices and the sharp depreciation of the manat. The downturn has hit customers, who have been unable to pay back their loans.

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(News report from Issue No. 282, published on May 27 2016)