Tag Archives: Kazakhstan

Kazakh government to fine Karachaganak $2b, say sources

ALMATY, OCT. 27 2015 (The Conway Bulletin) — The Kazakh government is considering levying a heavy fine against Karachaganak, Kazakhstan’s largest gas field, worrying observers who said this could mean a revival of resource nationalism.

According to sources quoted by Bloomberg News, the Kazakh government is likely to impose a penalty against the consortium operating Karachaganak for as much as $2b, in an attempt to earn quick cash for its crisis-hit state budget.

The sources, described as being familiar with the project, said the fine was for failing to meet contractual obligations.

A $2b fine would be the largest-ever penalty imposed on an energy consortium in Kazakhstan, exceeding a 2014 fine on Kashagan of $737m and a 2007 claim on Tengiz for $609m. British BG Group and Italian Eni own 29.5% each. Chevron and Lukoil are the smaller shareholders with 18% and 13.5% respectively. State-owned Kazmunaigas bought a 10% stake in the project in 2012, after a two-year tax dispute.

BG Group, Eni, Kazmunaigas and the Kazakh government all declined to comment.

The Bloomberg story hinted at resource nationalism, said Lawrence Markowitz, professor of Political Science at Rowan University.

“Contestation between Kazakhstan’s government and multinational corporations centres on contracts and this could be a case of a government using fines and penalties to be more predatory on the wealth these deposits generate,” Mr Markowitz told the Bulletin.

Other observers said Kazakhstan may be positioning itself ahead of a contract renegotiation.

“There is certainly pressure in Kazakhstan to change the Production Sharing Agreement contracts signed in the 1990s, because they were too generous for foreign companies,” said Nygmet Ibadildin, professor of Energy Policy at KIMEP University.

Shell agreed to buy BG earlier this year but speculation has mounted that Kazakhstan could exercise its preemptive rights to jump in and buy BG’s share.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Kazakhstan’s Intergas to buy back Eurobonds

OCT. 26 2015 (The Conway Bulletin) — Intergas Central Asia said it would buy back $270m of its outstanding Eurobonds due in 2017, media reported. Intergas is a subsidiary of Kazakhstan’s state owned pipeline company KazTransGas. Analysts said the buyback was positive for Intergas as it reduced its exposure to Kazakh banks.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Currency: Kazakh tenge, Kyrgyz som

OCT. 30 2015 (The Conway Bulletin) — In this current regional economic crisis, when currencies are stable it has to be positive.

The US Federal Reserve Bank kept interest rates unchanged, giving some more breathing room to currencies across Central Asia and the South Caucasus.

This was one of the first stable weeks for currencies in the region after heavy turbulence shook, ravished even, the markets.

The three free-floating currencies followed a similar pattern this week, weakening only marginally.

The Kazakh tenge lost just 0.5% of its value against the US dollar, ending at 279.2/$1 on Friday. The Kyrgyz som followed suit losing 0.7% of its value at 69.4/$1. The Georgian lari was stable at 2.39/$1.

In Tajikistan, the Central Bank said the somoni lost 30% of its value in the year to Sept. 2015. On Friday, it was stable at 6.62/$1.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Business comment: IMF’s reforming zeal

OCT. 23 2015 (The Conway Bulletin) — The South Caucasus and Central Asia might be looking at a long term economic crisis, the IMF said, sending a chill down the spines of the region’s investors.

After the shock of the 2008/9 financial crisis, countries across the region picked up pace and restored the steady growth pattern they had witnessed in the early 2000s.

But the current crisis, which Kazakhstan’s President Nursultan Nazarbayev called worse than the 2008/9 financial crunch, could linger on for longer than expected because of its ripple effects on the Russian economy, the IMF said.

Lower oil prices have affected hydrocarbon exporters from the region – big and small, private and state. Several exploration and production projects have become unprofitable and revenues have lost value. The IMF forecast a break- even price of around $60/barrel or higher for both Azerbaijan and Kazakhstan. If oil prices are lower, debt will grow and reserves will shrink.

Tajikistan, Kyrgyzstan and Armenia, had been forecasted to be better off due to lower oil prices, but the fall in the rouble has reduced the value of their remittances and pressured currencies.

And the IMF had a message. Reform is the only option, it said.

“The long-lasting nature of the shocks means that deeper and more durable policy changes will be needed,” Juha Kähkönen, deputy director of the IMF in Almaty said.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Kazakhstan can impose Karachaganak fine

OCT. 27 2015 (The Conway Bulletin) – The Kazakh government could impose a $2b penalty on the consortium operating the Karachaganak gas field, Bloomberg News quoted sources as saying.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Nostrum cuts expectations in Kazakhstan

OCT. 27 2015 (The Conway Bulletin) — Hit by delays in infrastructure maintenance, London-listed Nostrum Oil & Gas reduced its production target for 2015 by 9% to 41,000 barrels of oil equivalent per day. In its Q3 statement, Nostrum said repair work at a Kazakh state-owned gas export pipeline was now complete and production was back to normal.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Kazakhstan’s Samruk-Kazyna gets Kashagan loan

OCT. 27 2015 (The Conway Bulletin) – Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, signed a five-year loan agreement for up to $1.5b to help fund its purchase of a 8.4% stake in the Kashagan oil field. Kazmunaigas, Kazakhstan’s state-owned energy company, agreed earlier this year to sell half its 16.81% stake in Kashagan to Samruk–Kazyna. The manoeuvre is considered a mechanism to help Kazmunaigas raise funds during this period of depressed oil prices.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Kazakhstan hoards gold

OCT. 26 2015 (The Conway Bulletin) – In September, Kazakhstan increased its gold reserves by 1.5% to around 213 tonnes. Kazakhstan has increased its gold holdings in each of the past 36 months. Gold prices hit a 5-year low in July but have recovered.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Stock market: Centerra Gold, KAZ Minerals

OCT. 30 2015 (The Conway Bulletin) — The US Federal Reserve Bank’s hinted that interest rates could be increased in December, hitting stock markets worldwide. South Caucasus- and Central Asia-related shares were no exception.

Miners were hit badly. Kyrgyzstan- focused Centerra Gold saw its shares lose over 9% in Toronto this week, closing at 7.36 Canadian dollars on Friday.

KAZ Minerals shares were also down 9%, closing at 116p on Friday.

After announcing it would pay a dividend to its shareholders on Oct. 30, Central Asia Metals reversed a slow start and closed on Friday, with a marginal positive growth, at 163p/share in London.

Oil and gas producers also suffered, despite oil prices gaining 2% this week with Brent crude closing at $49.5/barrel. Kazakhstan-focused Tethys Petroleum and Nostrum Oil & Gas both lost around 10% this week.

After reaching an 8-month high at £21.35/share last Friday, London-listed Bank of Georgia fell by 6.5% to £20.00. Last week its shares rallied after a healthcare group it holds a large stake in announced an IPO price range that valued the company at around $500m.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Immolation outside Nur Otan office stirs anger in Kazakhstan

OCT. 24 2015, ALMATY (The Conway Bulletin) — A 20-year-old man set fire to himself in the city of Taraz, south Kazakhstan, outside the headquarters of President Nursultan Nazarbayev’s political party, a rare suicide by immolation that would have worried the authorities.

A video uploaded onto Youtube showed Yerlan Bektibayev talking to the camera in a central square in Taraz, before pouring lighter fuel over his head, setting himself on fire and then running into the Nur Otan building.

Bektibayev spoke in Kazakh before he set himself alight, explaining that he wanted to kill himself because he couldn’t find a job and that the authorities had bullied him by planting drugs on him and locking him up in prison for a murder that he didn’t commit.

“I cannot find any other way but to die. I do not want to live,” he said on the video.

Kazakhstan has a high rate of youth suicide. The United Nations has said that it is in the top ten countries for suicides of people between the ages of 14 and 29, but, even so, Bektibayev’s choice of setting himself on fire outside the Nur Otan regional headquarters will have alarmed the authorities.

It was an overtly political back- drop to the suicide, with overtones of the immolation in Tunisia in 2010 that sparked the Arab Spring uprisings.

Official media largely avoided reporting on the suicide, one TV journalist who works for a state linked channel said he was told not to report on it, and police detained the man who filmed Bektibayev’s immolation.

Social media, though, was full of conflicting opinion. Some said that Bektibayev was to blame for taking his own life, others that society had failed him.

There was no official comment either from Nur Otan or the Taraz regional government.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)