Tag Archives: business

KMG EP revenue rises in Kazakhstan

NOV. 17 2016 (The Conway Bulletin) — London-traded KMG EP, a subsidiary of Kazakhstan’s state-owned energy company Kazmunaigas, posted a 47% increase in tenge-denominated revenue in the first nine months of 2016, compared to the same period last year, mostly due to the weaker tenge/US dollar exchange rate. Production fell by 1.2%, mainly because of a 6% drop at its PetroKazakhstan subsidiary, which operates in the central Kyzylorda region.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Stock market: Tethys Petroleum,Olisol

NOV. 18 2016 (The Conway Bulletin) — After hovering at around 1.5p for several months, Tethys Petroleum’s share price reached rock bottom at around 0.9p in early November, following increasingly worse news coming from its operations in Kazakhstan.

Its prospective local partner, Olisol, first missed a payment of 9.8m Canadian dollars ($7.3m) and later cancelled Tethys’ gas sales contract in Kazakhstan. It then pulled out completely from its initial offer to become a major shareholder in Tethys.

In addition, Tethys’ local subsidiaries were raided by the Kazakh police and their asset frozen.

The stock price picked up again this week after new potential investors came forward and a Kazakh court dropped the charges against the local subsidiaries. But with much work still to be done before a financing agreement is reached and with a pending legal dispute in Tajikistan, Tethys is far from having found a safe harbour.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Business Comment: Azerbaijan’s hunt for partners

NOV. 18 2016 (The Conway Bulletin) — Despite slowing domestic production and overall exports, Azerbaijan is stubbornly reaching out to building partnerships with other countries to sell its oil.

Last week, the government and state-owned SOCAR mulled the launch of a pilot programme with Egypt to send 2m barrels of oil to refine in Egyptian plants. In recent weeks, Azerbaijan also planned to send oil to Belarus and Ukraine and to build an oil terminal in Benin, of all places.

Sending oil to its former Soviet sisters Belarus and Ukraine would probably be feasible from a technical point of view, but analysts have shown that Azerbaijan might just not have enough oil to provide for its domestic demand and for the pipeline contracts it already has in place.

SOCAR is sending increasingly less oil through its main export pipelines, posting a 4% decrease via Baku-Tbilisi-Ceyhan, an 11% decrease via Baku-Supsa and an 11% decrease via Baku-Novorossiysk in the first ten months of 2016.

And in the first three quarters of the year, SOCAR posted an 8.7% fall in production due to the drop in the price of oil.

SOCAR’s poor performance in 2016 begs the question of whether the company’s bullish plans to export oil to new destinations and invest in West Africa make economic and financial sense. If there is any sense in this at all, it is difficult to find.

With oil prices still hovering around $50/barrel, SOCAR and its multinational partners in Azerbaijan will maintain low production figures, and this will certainly not boost exports.

The question is, now, who does Azerbaijan turn to to boost its client base.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Kazakhstan’s Kashagan provides oil update

NOV. 14 2016 (The Conway Bulletin) — Kazakhstan’s giant Kashagan oil field produced 1.5m barrels of oil in its first month of operations, official media reported. In daily terms, Kashagan produced an average of 52,600 barrels, far below the minimum threshold of 75,000 barrels/day that the consortium said it needs to produce to keep extraction commercially viable. The Kazakh government had previously said it expects Kashagan to reach an average of 90,000 barrels/day before the end of the year.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Kazakhstan plans a freight company

NOV. 11 2016 (The Conway Bulletin) — Kazakhstan’s national airline Air Astana and its state-owned railway company Temir Zholy will combine next year to create a new air freight company, media reported. It quoted a Temir Zholy official as saying that Kazakhstan wanted to exploit its position between Asia and Europe to boost its economy by acting as a logistics and cargo hub. Uzbekistan has already developed plans to set itself up as a similar transport hub.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Comment: Kazakh electricity plans

NOV. 18 2016 (The Conway Bulletin) — The Kazakh government has cancelled plans to build either a thermal or nuclear power station despite saying for the past decade that an upgrade to its power generating system was vital.

At a press briefing earlier this month in Astana, Kazakh Energy Minister Kanat Bozumbayev said that, despite predictions of the opposite, Kazakhstan actually now has a surplus of power.

“We see no deficit within the next seven years, so we see no [need to build] new facilities such as a nuclear power plant within the next seven years,” he said. This is an important statement for two reasons. Firstly Bozumbayev is doing future generations of Kazakhs a disservice. Secondly he is not being honest with this current generation of Kazakhs.

Both the short-termism and the dishonesty are worrying. Kazakhstan needs more power. Just ask people living in Almaty who have to deal with an increasing number of brownouts. As the country has modernised and grown wealthier, electricity consumption has soared. World Bank data showed that in 2013, Kazakhstan’s per capita electricity consumption was 4,892 kilowatt hours, up from a post-Soviet low in 1999 of 2,838 kilowatt hours.

At the same time, Kazakhstan’s population has grown from just under 15m people in 1999 to just over 17m people in 2015.

Kazakhstan prevaricated for years with various suitors over building a new nuclear power station, its Soviet-era nuclear power station had been decommissioned in 2001, but earlier this year said it had scrapped the idea.

In September, Kazakhstan and Korea’s Samsung also finally admitted that its mothballed $2.5b plan to build a coal-fired power station on the shores of Lake Balkhash to feed electricity to Almaty had also been scrapped.

And here’s the hard truth, the real reason that Kazakh officials said they don’t need a new power station is that Kazakhstan’s finances are currently not up to funding the construction of one.

Last year, Samsung Engineering CEO Park Jung-heum said he had mothballed the Balkhash thermal power project “because of an issue with the Kazakhstan government over the guaranteed purchase of the power to be produced from the project.”

Power generation plans in Kazakhstan have become the latest victim of the economic downturn. The government should admit this and lay plans to boost production as soon as they can afford to.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Sanofi enters the fray in Uzbekistan

NOV. 11 2016 (The Conway Bulletin) — French pharmaceuticals company Sanofi entered a partnership with Uzbek state-owned Uzfarmsanoat to produce medicines in the country, official media reported. The Uzbek ministries of health and of international trade said that the deal will focus on the production and circulation of flu vaccines.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Russneft adds assets in Azerbaijan

NOV. 15 2016 (The Conway Bulletin) — Ahead of a planned IPO in Moscow, Russian energy company Russneft said it will add oil and gas assets in Azerbaijan to its balance sheet in 2017. The 15b cubic metres of gas and 11.2m tonnes of oil holdings in Azerbaijan were owned by Global Energy Azerbaijan. Russian billionaire Mikhail Gutseriev owns a majority share in Russneft and owned Global Energy Azerbaijan before it was bought by Russneft in 2014. Oil trading giant Glencore owns a minority stake in Russneft.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Qazkom and Halyk Bank eye merger to create Kazakh bank giant

ALMATY, NOV. 15 2016, (The Conway Bulletin) — Kazakhstan’s largest lenders, Halyk Bank and Qazkom, are in talks to merge and create a super- sized bank with strong links to the Kazakh elite that would dwarf its rivals, according to sources quoted by Reuters.

Reuters quoted two anonymous sources, who both confirmed that talks were under way and that the merger could be agreed after Halyk redeems a $638m Eurobond in May 2017.

Importantly, one of the sources said that the idea behind the merger traces all the way up to the presidential family.

President Nursultan Nazarbayev’s daughter Dinara and her husband Timur Kulibayev coown Halyk Bank. Kenes Rakishev, son-in-law of Mr Nazarbayev’s close ally Imangali Tasmagambetov, owns Qazkom. Mr Tasmagambetov is minister of defence.

Qazkom which rebranded last month from Kazkommertsbank, gave a guarded denial that a merger was about to happen. Halyk Bank did not comment.

“Responding to recent rumours, I can say that Qazkom has neither made nor received offers regarding a merger with Halyk Bank,” Qazkom’s press officer, Sergei Chikin, told media

A merger would form a banking superpower in Kazakhstan, four times larger than its biggest competitor, Tsesnabank, owned by Adilbek Dzhaksybekov, head of the Presidential Administration. Analysts, though, are skeptical at the prospects of a merger, which would create a bank with a 40% of the loans market.

“Even if the talks are proved true, the Central Bank is unlikely to allow a merger that would monopolise the market,” Rasul Rysmambetov, director of the Public Fund Financial Freedom, told the Inform-Kazakhstan news agency.

In the past two years, both Qazkom and Halyk have cleaned up their toxic assets, which built up during the Global Financial Crisis of 2008/9. Qazkom had also bought Kazakhstan’s once-largest lender BTA Bank, now riddled with non- performing loans. It also changed ownership, with Mr Rakishev sidelining founder Nurzhan Subkhanberdin.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Georgia begins East-West pipeline construction

NOV. 16 2016 (The Conway Bulletin) — Georgian Oil and Gas Corporation said it started construction on a section of the East-West gas pipeline, from Tsiteli Khidi on the border with Azerbaijan to Gardabani. The company said it will invest 4.5m lari ($1.4m) to complete the 20km section. Georgia ordered a general overhaul of the 450km Soviet-era pipeline from the border with Azerbaijan to the Black Sea port of Poti. State-owned Partnership Fund is the only shareholder.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)