Tag Archives: hydrocarbons

Azerbaijan’s SOCAR walks away from deal to buy Greek gas pipeline network

DEC. 1 2016 (The Conway Bulletin) — Azerbaijan’s state-owned SOCAR and Italy’s Snam pulled out of a deal to buy a major stake in Greek gas distributor DESFA after a row about the price, ending three years of on-off negotiations.

The failure of the deal scuppers SOCAR’s ambitions to own a major gas pipeline network inside the EU that would also have acted as the final section of the so-called Southern Gas Corridor, a network of gas pipelines that it has built to pump gas from the Caspian Sea to Europe.

Greece’s energy ministry announced the collapse of the deal.

“In the last months, the government has been in ongoing talks with representatives of the companies SOCAR and Snam for the sale of 66% of DESFA. The atmosphere in the talks was constructive,” it said in a statement.

“Nevertheless, the offer submitted on the part of the prospective buyers regarding the reduction of the sale price (repayment in instalments) was legally impossible and would have invalidated the tender.”

Neither SOCAR nor Snam have commented.

The deal was originally hailed as a landmark agreement in 2013 when SOCAR agreed to pay €400m for a 66% stake in DESFA.

The EU, though, stepped in to block the deal because it failed to comply with its market competition laws. This bans companies that own upstream elements of an energy supply chain from owning more than 49% of downstream elements.

In July this year Stergios Pitsiorlas, chairman of the state Hellenic Republic Asset Development Fund, said that SOCAR had found a partner in Italy’s Snam. They would, he said, split the stake. SOCAR would buy 49% and Snam 17%.

This air of success, though, has soured over the last few months when SOCAR and Snam tried to renegotiate the price. They said a 50% collapsed in energy prices since 2014 meant that the original €400m price tag was over-inflated.

Now the deal has been declared dead with Greece officials apparently refusing to budge on the price.

Despite the failure of SOCAR to buy DESFA, the Southern Gas Corridor should still be delivering gas to Europe by 2019/2020.

ENDS

(News report from Issue No. 307, published on Dec. 2 2016)

Azerbaijan’s SOCAR Trading eyes China

NOV. 30 2016 (The Conway Bulletin) — SOCAR Trading, the Geneva-based subsidiary of Azerbaijan’s state- owned energy company, said it will look to boost sales to China after two experienced Chinese oil traders joined the company in November. In an interview with Reuters, SOCAR Trading CEO Arzu Azimov said that the company plans to enter the Asian markets.

ENDS

(News report from Issue No. 307, published on Dec. 2 2016)

Azerbaijan’s SOCAR buys in Ivory Coast

NOV. 25 2016 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR said it bought a 26% stake in an LNG terminal in Ivory Coast, expanding its investment in West Africa. The CI-GNL terminal is operated by France’s Total. Earlier in November, SOCAR pledged investments in Benin and Burkina Faso.

ENDS

(News report from Issue No. 307, published on Dec. 2 2016)

Georgia may sell 25% stake in energy company in IPO

TBILISI, NOV. 29 2016 (The Conway Bulletin) — The Georgian government is considering selling a 25% stake in Georgian Oil and Gas Corporation (GOGC) on the London Stock Exchange next year, a move that would give foreign investors another chance to buy into Georgia.

GOGC is Georgia’s state-owned energy company, administering its oil and gas contracts and also refurbishing and building power stations to generate electricity. Selling a 25% stake GOGC is likely to generate high levels of investor interest.

Georgia’s finance minister Dmitry Kumsishvili said: “The corporation’s 25% stake will be placed on one of the exchanges abroad, in London or Shanghai.”

Georgia’s BGEO Group, which controls Bank of Georgia, and its subsidiary Georgian Healthcare Group are already listed in London.

GOGC controls the North-South pipeline used by Russia to export gas to Armenia and is building the 450km-long East-West pipeline network, that will link its southern border with Azerbaijan to the Black Sea port of Poti. It also owns a 51% stake in the $230m Gardabani power plant, one of the biggest in Georgia, which was opened last year.

Azerbaijan’s state-owned energy company SOCAR, which supplies gas to Georgia, has also said that it is interested in buying a 25% stake in GOGC, according to the Trend news agency.

ENDS

(News report from Issue No. 307, published on Dec. 2 2016)

OPEC courts non-members, including Azerbaijan

NOV. 24 2016 (The Conway Bulletin) — Azerbaijan’s energy minister, Natig Aliyev, said that OPEC had asked Azerbaijan and other non-OPEC members to cut oil production in an attempt to raise prices. Azeri newspaper Respublika quoted Mr Aiyev as saying that OPEC wanted non-members to cut up to 800,000 barrels of oil per day of production, a figure that it said would eat into the vast reserves. OPEC and non-OPEC members are due to meet again in Vienna on Nov. 28 to decide on the final level of cuts to production.

ENDS

(News report from Issue No. 306, published on Nov. 25 2016)

Stock market: Nostrum Oil & Gas

NOV. 25 2016 (The Conway Bulletin) — Amsterdam-based Nostrum Oil & Gas posted a decline in revenues it its Q3 report this week, but that didn’t stop investors buying its stock.

Nostrum’s stock price climbed back to November 2015 levels, seemingly dispersing the tough months of 2016, when oil prices plunged to around $30/barrel.

The company successfully cut costs and hopes to contain the drop in production to around 10% this year. Next year, the company will further reduce costs once it starts sending its oil through the KazTransOil pipeline due to be completed in Q2 2017.

“We look forward to realising a significant decrease in transportation costs once the KTO pipeline connection is complete by Q2 next year,” CEO Kai-Uwe Kessel said in a statement.

“Our focus now turns towards the 2017 drilling programme and delivering our major infrastructure project, GTU3, on time and on budget.”

ENDS

(News report from Issue No. 306, published on Nov. 25 2016)

Kazakhstan-based Nostrum revenues drop

NOV. 23 2016 (The Conway Bulletin) — Kazakhstan-focused Nostrum Oil and Gas posted a 35% fall in revenues for the first nine months of 2016, compared to the same period last year, a slight recovery compared to H1 results. Nostrum said it had successfully cut costs to counter sustained low oil prices. Production averaged 38,900 barrels/day in the reported period, down 12% from 2015. The company said it expects production to average 40,000 barrels/day by year-end.

ENDS

(News report from Issue No. 306, published on Nov. 25 2016)

Kazakhstan oil field goes commercial

NOV. 21 2016 (The Conway Bulletin) — Kazakhstan’s troublesome Caspian Sea oil field Kashagan has finally started producing oil on a commercial basis, Kazakh oil and gas minister Kanat Bozumbayev said in a speech to parliament. The project has been heavily delayed and has run several billion dollars over budget but the news still marks an important bench mark for Kazakhstan which is counting on Kashagan revenues boosting it into the top tier of global oil producers.

ENDS

(News report from Issue No. 306, published on Nov. 25 2016)

S&P improves credit outlook for Georgian Co.

NOV. 21 2016 (The Conway Bulletin) — Ratings agency Standard & Poor’s improved the credit outlook for Georgian Oil and Gas Corporation from negative to stable, saying its performance had improved. Standard & Poor’s affirmed the company’s credit rating at B+/B and positively reviewed the financial health of the company, which is poised to decrease reliance on loans.

ENDS

(News report from Issue No. 306, published on Nov. 25 2016)

Total signs deal to produce gas at Azerbaijan’s Abershon

NOV. 21 2016 (The Conway Bulletin) — French energy company Total signed an agreement to develop the first phase of the Absheron gas and condensate field in Azerbaijan, a major boost for the country’s oil and gas sector, although it also said that production levels would be far lower than originally projected.

Total discovered Absheron in 2011 and owns a 40% stake in the project. Other shareholders include state- owned SOCAR (40%) and ENGIE, a French utility company (20%).

The company had said the field, off the Absheron peninsula, around 60km from Baku, would produce 5b cubic metres (bcm) of gas annually in the first stages and between 7 and 8 bcm at a later stage. But Total’s latest press release told a different story.

“The development involves the drilling of one well at a water depth of 450 meters. Production from this high pressure field will be around 35 thousand barrels of oil equivalent per day, including a significant portion of condensate,” Total said.

This means that yearly production volume would be around 2.1 bcm, 60% smaller than originally planned.

Analysts said that the Azerbaijani government has pressured Total into producing at Abershon ahead of the original target start date, possibly forcing it to cut output targets.

“If they previously planned to produce first gas in 2022, now they talk about the beginning of 2020,” Ilham Shaban, head of the Caspian Barrel research outfit, told the Vestnik Kavkaza website.

Absheron’s gas will compensate for declining domestic production in Azerbaijan, according to Total.

“The produced gas will supply Azerbaijan’s domestic market,” the company said.

Azerbaijan’s gas production has flatlined in recent years to around 19bcm and it is poised to decline this year.

ENDS

(News report from Issue No. 306, published on Nov. 25 2016)