MARCH 1 2015 (The Conway Bulletin) – Georgia increased the amount of tax imposed on alcoholic drinks by 50% to 60 tetri. The government said the rise is needed to align its tax base with EU regulations. Opponents said this is not the case and that it is just trying to raise extra revenues.
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(News report from Issue No. 221, published on March 4 2015)
MARCH 3 2015 (The Conway Bulletin) – Kazakhstan’s foreign minister Erlan Idrissov flew to Brussels for a meeting with the EU where both sides committed to deepening their partnerships. The EU’s backing is important for Kazakhstan because of the growing stigma in the West over former Soviet countries’ ties to Russia.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 221, published on March 4 2015)
MARCH 4 2015 (The Conway Bulletin) – The European Union has identified Central Asia and the South Caucasus as a future source of energy that will, importantly, reduce its reliance on Russia.
In an interview with the FT, Maros Sefcovic, the European Commission’s vice-president for energy affairs, said that the region could become a major supplier of gas to the EU.
In particular, the EU is looking to Azerbaijan and Turkmenistan. It has diligently invested time and money building up relations and pipeline infrastructure over the past few years in the region.
Now, as relations with Russia sour over the Kremlin’s support for separatists in Ukraine, the EU is speeding up its search for alternative sources of energy.
And in Central Asia and the South Caucasus it will find a willing partner. The fallout over the drop in Russia’s economy and the collapse in energy prices have been severe and governments are looking for alternative markets. Europe may be bureaucratic but it is stable and reliable.
Turkmenistan’s government was quick to respond positively to the EU’s smoke signals.
It’s a different scenario in countries which don’t produce energy.
Armenia is reliant on Russia’s Gazprom for its energy. It has had to ask for a gas price discount, pulling it more and more under the influence of the Kremlin.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 221, published on March 4 2015)
MARCH 2 2015 (The Conway Bulletin) – Uzbekistan’s deputy PM, Ulugbek Rozukulov, met with the Azerbaijani economy minister, Shahin Mustafayev to discuss increased cooperation and specifically whether Azerbaijan will be able to buy cars that had been built for the Russia market before the collapse of the rouble and the economic crisis.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 221, published on March 4 2015)
FEB. 25 2015 (The Conway Bulletin) – In a boost to Turkmenistan’s aspirations to expand its client base for gas deliveries, the EU said it was stepping up efforts to diversify its energy suppliers away from Russia.
The Financial Times reported that a long-term energy blueprint drawn up by the EU will emphasis building relations with countries such as Turkmenistan, Azerbaijan and Algeria.
Russia currently supplies around 27% of the EU’s gas needs, an excessive over-reliance, according to EU diplomats.
Maros Sefcovic, the European Commission’s vice-president for energy affairs, said it was sensible to diversify.
“As much as we want to diversify our energy sources, I think the countries around the Caspian equally want to diversify their [export] routes,” he told the FT.
This will please Turkmen President Kurbanguly Berdymukhamedov. He has said that he wants to increase the number of clients Turkmenistan has for its gas.
China dominates Turkmenistan’s order books. Iran and other neighbours also buy gas but in smaller quantities.
It has previously floated the idea of a pipeline underneath the Caspian Sea linking Turkmenistan directly to pipelines pumping gas from Baku across the South Caucasus, Turkey and into Europe. The problem is that building the pipeline requires serious investment.
Turkmenistan holds the world’s fourth largest gas reserves in the world and its officials want to supply Europe.
“A huge resource base of hydrocarbons onshore and offshore allows Turkmenistan to increase the exports of natural gas to the world markets, to develop the new routes of its exports in the eastern and the European directions,” the Turkmen energy ministry said after the FT story.
A global drop in energy prices is pressuring Turkmenistan’s economy, forcing the Central Bank to devalue its currency. Part of the problem is Western sanctions on Russia imposed in retaliation for its support to separatists in Ukraine.
But there may be an upside for Turkmenistan, as the row speeds up Europe’s energy diversification.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 221, published on March 4 2015)
FEB. 27 2015 (The Conway Bulletin) – Kyrgyz parliamentarians threatened to nationalise the Kumtor gold mine by the end of March unless its Toronto-listed owner, Centerra Gold, agreed to a new joint-venture to run it.
The ultimatum increases the stakes in the long-running battle for control of the gold mine — Kyrgyzstan’s single biggest economic asset.
“We should finally end this epic,” Reuters quoted parliamentary speaker Asilbek Zheenbekov as saying after the parliamentary vote. “Today we adopted a tough resolution.”
The row over Kumtor has dented both productivity at the gold mine based in the eastern mountains of Kyrgyzstan and the country’s GDP as well as its image as a place for foreign investors to set up businesses.
Centerra Gold has accused Kyrgyz nationalists of wiping up public anger against Kumtor through bogus environmental infringements. Kyrgyzstan has said Centerra Gold needs to run and manage Kumtor more effectively.
The Kyrgyz government wants to swap its 32.7% stake in Centerra Gold for a 50:50 joint venture with the company directly in Kumtor. Commenting on Centerra Gold’s full year results last month, its CEO, Ian Atkinson, said he was studying the proposal. This non-commitment may be the source of the frustration felt by Kyrgyz lawmakers.
Now, the issue of Kumtor’s ownership will once again move to the foreground, potentially destabilising the country and damaging for its reputation further.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 221, published on March 4 2015)
MARCH 3 2015 (The Conway Bulletin) – Kenes Rakishev, a 35-year-old Kazakh businessman who is the son-in-law of the country’s defence minister Imangali Tasmagambetov, became a major shareholder in Kazkommertsbank, one of Kazakhstan’s biggest and most prominent banks.
Last year, in a deal with Kazkommertsbank, Mr Rakishev bought debt-ridden BTA Bank from the government.
Now he has swapped his stake in BTA Bank for a 16% stake in Kazkommertsbank. The manoeuvre is part of the merger of the two banks.
It also dilutes Nurzhan Subkhanberdin’s ownership of Kazkommertsbank. Mr Subkhanberdin is based mainly in London and has previously been linked to Kazakhstan’s opposition.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 221, published on March 4 2015)
MARCH 2 2015 (The Conway Bulletin) – The collapse in oil prices forced Max Petroleum, a British-Kazakh oil and gas company, to suspend trading on the London AIM stock exchange.
In a statement, Max Petroleum said it was in negotiations to restructure its debt with Sberbank and other creditors.
“If current negotiations are unsuccessful, or if other events outside the control of the Company require that the Company ceases trading while such negotiations are ongoing, then the consequences will be negative for all stakeholders in the Company,” the company statement said.
Last month Max Petroleum squarely blamed the slump in global oil prices for its problems which wiped out profit margins and deterred potential investors.
The Max Petroleum’s troubles are a microcosm of the problems facing Kazakhstan-orientated companies trying to weather an economic downturn linked to the oil price drop and the turmoil in Russia’s sanction-hit economy.
Almaty-based confectionery plant Rakhat, which South Korea’s LOTTE bought in 2013/2014 in a multi-million dollar deal, also said that it had had to lay off 500 of its 3,800 workers. It blamed unfair competition from cheaper Russian sweets.
Once feted as one of Kazakhstan’s most famous companies outside the extractive industries, Rakhat is now trying to eke its way out of the economic storm — just like most other Kazakh companies.
Max Petroleum, listed on the LSE since 2005, is a small Kazakhstan oil producer with an output of around 200,000 tonnes of oil a year.
In August 2014, AGR Energy, linked to the prominent Assaubayev family, made a deal to buy 51% of Max Petroleum for £37m ($62m), promising to embark on a significant investment to revitalise the company. The slump in oil prices, though, appears to have deterred AGR Energy from follow through with the deal and the promised investment.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 221, published on March 4 2015)
FEB. 19 2015 (The Conway Bulletin) — In its annual report, the Toronto-based Centerra Gold said that its Kumtor mine in eastern Kyrgyzstan produced 10% less gold in 2014 than it did in 2013.
Kumtor is not only important to Centerra Gold, which also has other assets, but is also vital to the economic health of Kyrgyzstan. It is the country’s largest single asset and contributes around 10% of its total GDP.
Already reeling from the fallout from Russia’s sanction-hit economic slowdown, the news from Centerra Gold that, although expected, gold production at Kumtor had fallen will be a another big blow to Kyrgyzstan.
Centerra Gold said gold production in 2014 was around 620,000 ounces, down from 690,000 ounces.
Kumtor has been a headache over the past few years. Kyrgyzstan wants to assume more control over the gold mine, while Centerra Gold has been fighting to retain its share.
Strikes and protests caused part of the drop in production at Kumtor.
Centerra Gold CEO, Ian Atkinson said of negotiations with the Kyrgyz government over Kumtor ownership: “We are in the process of negotiating the definitive agreements to implement the restructuring as described in the Heads of Agreement signed on January 18, 2014 and are continuing discussions with the Kyrgyz Government in this regard.”
Kyrgyzstan wants to swap its 32.7% stake in Centerra Gold for a 50:50 joint venture in Kumtor directly.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 220, published on Feb. 25 2015)
FEB. 18 2015 (The Conway Bulletin) — Kazakh president Nursultan Nazarbayev ordered work on the Almaty Metro system to stop because of a shortage of funds, media reported. The first phase of Almaty’s metro was unveiled in 2011 but high costs and low passenger numbers have combined with a drop in government funds to delay a planned extension.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 220, published on Feb. 25 2015)
