Tag Archives: hydrocarbons

Turkmenistan cuts petrol subsidy

APRIL 29 2014 (The Conway Bulletin) — In a surprising, and perhaps risky, move, Turkmenistan’s President Kurbanguly Berdymukhamedov ordered the authorities to scrap a monthly handout of petrol to car owners.

Mr Berdymukhamedov had introduced the subsidy in 2008 to ease a massive increase in the price of fuel. Mr Berdymukhamedov’s eccentric predecessor Saparmurat Niyazov had set the price of petrol at an unrealistic 2 cents per litre. Mr Berdymukhamedov wanted to raise the price to 22 cents.

Reuters quoted Turkmenistan’s state media as saying that the abolition of the fuel allowance was needed to “help sustain the growth of the national economy, achieve the efficient use of oil products and ensure their orderly converting to cash on the domestic market”.

In other words, Mr Berdymukhamedov decided that it was time to wean the population off the free fuel allowance.

Turkmenistan can, after all, afford the petrol giveaway. It has grown rich from energy exports. These exports are mainly gas. It produces roughly 10m tonnes of crude oil a year, most of which it refines into oil products locally.

Salaries are low in Turkmenistan. The sudden cut in fuel subsidies may impact people and increase resentment.

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(News report from Issue No. 182, published on April 30 2014)

EU could extend Azerbaijani pipelines

APRIL 28 2014 (The Conway Bulletin) — The European Union is considering extending the proposed TANAP-TAP gas pipeline from Azerbaijan from its current endpoint in Italy to France and Spain, the Russian newspaper Vedomosti reported quoting a European Commission official. TANAP-TAP is supposed to be completed by 2019.

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(News report from Issue No. 182, published on April 30 2014)

China buys more energy in Kazakhstan

APRIL 15 2014 (The Conway Bulletin) — China’s state-owned Sinopec bought the Kazakhstan business unit of Russia’s Lukoil for $1.2b. The deal to buy 50% of Caspian Investment Resources ltd (CIR) underlines the shift in Kazakhstan’s energy sector away from Russia towards China. Sinopec already owned the other 50% of CIR.

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(News report from Issue No. 180, published on April 16 2014)

Turkmenistan seeks to develop Caspian energy

APRIL 11 2014 (The Conway Bulletin) — Turkmen president Kurbanguly Berdymukhamedov said that he wanted to develop the energy reserves in Turkmenistan’s sector of the Caspian Sea. Under Mr Berdymukhamedov’s 7-year presidency Turkmenistan has propelled itself into becoming one of the biggest energy suppliers in the region.

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(News report from Issue No. 180, published on April 16 2014)

Gazprom takes over KyrgyzGaz

APRIL 10 2014 (The Conway Bulletin) — Russian state gas monopoly Gazprom officially took over KyrgyzGaz, the previously state-owned gas company. Gazprom’s takeover of debt-straddled KyrgyzGaz — to be renamed Gazprom-Kyrgyzstan — gives the Kremlin increased leveraged over Bishkek.

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(News report from Issue No. 180, published on April 16 2014)

Kazakhstan wants to offset Kashagan delays

APRIL 14 2014 (The Conway Bulletin) — Eager to boost oil production, Kazakhstan has said that it wants to increase output from its current projects to make up for the shortfall created by the longer-than- expected shutdown at Kashagan. Kashagan had been expected to turn Kazakhstan into a major energy superpower but instead is currently under repair.

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(News report from Issue No. 180, published on April 16 2014)

Oman asks Turkmenstan for gas

APRIL 14 2014 (The Conway Bulletin) — On a trip to Ashgabat, government officials from Oman said they wanted to develop the previously muted concept of setting up an energy transit corridor. States in the Persian Gulf have been trying to formalise the concept of an energy corridor with Central Asia for some years.

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(News report from Issue No. 180, published on April 16 2014)

Turkmen president calls for TAPI to speed up

APRIL 12 2014 (The Conway Bulletin) — It appears that Turkmen president Kurbanguly Berdymukhamedov is in a rush to start on the so-called TAPI pipeline that planners hope will carry gas from Turkmenistan across Afghanistan to south Asia.

The pugnacious Mr Berdymukhamedov said that work should begin on the pipeline in 2015, an ambitious timeframe in anybody’s books.

TAPI has been talked about for a few years. The US and others see the pipeline as a way of locking in Afghanistan, and to a lesser extent Pakistan, into the global energy network.

Once the notoriously restless and fractious Afghanistan is a stakeholder in this system, the thinking goes, stability will be more appealing.

And Turkmenistan is the perfect gas supplier. Stable and with ample supplies, Turkmenistan is keen to exploit its reserves and increase its client list, as Mr Berdymukhamedov’s haste betrays.

The problem is that although Turkmenistan may be ready to begin this ambitious 1,735km project, Afghanistan and Pakistan are far less ready.

Afghanistan is currently midway through a complex presidential election and is facing the prospect of a security vacuum once NATO forces withdraw this year.

The $8b project has enough support from international donors and from Western nations to push it forward. Turkmenistan, which is looking to boost its client base, needs to be patient.

(News report from Issue No. 180, published on April 16 2014)

Russia sanction could hit Kazakhstan

APRIL 15 2014 (The Conway Bulletin) — The fallout from Ukraine’s revolution and the ensuing standoff between Russia and the West has created a headache for Kazakhstan.

If relations fray further the US and the EU may impose trade sanctions on Russia and these will impact Kazakhstan.

But the Kazakh energy sector is probably more robust than energy minister Uzakbai Karabalin made out last week.

Kazakhstan relies heavily on Russia as a transit country for its oil and it may have to find alternative export routes, but those routes do exist. This might include sending oil south, through Iran to the Persian Gulf.

Around a third of Kazakhstan’s oil exports flow through the Caspian Pipeline Consortium (CPC) which owns the pipeline running from Atyrau in western Kazakhstan to Novorossiysk on Russia’s black Sea coast.

At first glance it looks as if any sanctions on Russia would hit CPC — the pipeline crosses Russia and feeds into a Russian mix of oil. But the CPC has international status and should, in theory, be exempt from sanctions.

Kazakhstan now also exports much of its oil to China, across the Caspian Sea and through the South Caucasus. Mr Karabalin’s concerns about the impact on Kazakhstan’s domestic oil-products market from a sanctions hit Russia also feels slightly overblown.

Kazakhstan has a shortage of refinery capacity and has to import oil products from China and Russia. This has been expensive and has threatened to push up prices.

If the West did impose sanctions on Russia and it did flood Kazakhstan with oil products, prices would drop.

Kazakhstan and the rest of Central Asia are exposed to Russia’s economy. If, under the weight of threatened sanctions, it stutters, so too does Central Asia. Kazakhstan’s energy sector, though, is more sheltered.

(News report from Issue No. 180, published on April 16 2014)

Kazakhstan’s main oilfield remains closed until 2016

APRIL 6 2014 (The Conway Bulletin) — Kazakhstan’s Kashagan oil field will be shut for another two years while faulty gas pipelines are replaced, unnamed sources close to the deal told the qz.com website. The $50b Kashagan project was supposed to have turned Kazakhstan into an energy superpower. Instead it has become a major headache for the government.

(News report from Issue No. 179, published on April 9 2014)