OCT. 22 2015 (The Conway Bulletin) – Kazakhstan’s president Nursultan Nazarbayev will visit Qatar, Britain and France over the next two weeks, according to his official website akorda.kz. Qatar is one of Kazakhstan’s main partners in financial and infrastructure cooperation. Mr Nazarbayev has cultivated close ties with Britain and France.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 19 2015 (The Conway Bulletin) — Russian airline company Transaero cancelled all flights from Moscow to destinations in Kazakhstan and Armenia after it declared bankruptcy. Russia’s Aeroflot will take over these flights. Transaero filed for bankruptcy on Oct. 1.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 17 2015 (The Conway Bulletin) — Iran and China are ready to help build Kazakhstan’s fourth oil refinery, Raymbek Amirzhanov, vice governor of the Mangistau region in north- western Kazakhstan, told media. Kazakhstan has repeatedly said it needs a fourth refinery to end its dependence on Russian petroleum products. Iran and China have said they will buy more oil from Kazakhstan through a swap system.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 23 2015 (The Conway Bulletin) — Oil companies suffered from a fall in oil prices this week. The Brent index closed at $48/barrel on Friday, down 5% this week.
Nostrum Oil & Gas lost around 9% this week, recovering on Friday to end at 475p per share in London. Nostrum’s summer objective Tethys Petroleum continued its slump, reaching the lowest level in 2015 on Oct. 22, trading at 0.06 Canadian dollars per share in Toronto on Thursday, rebounding slightly to 0.07 Canadian dollars on Friday. Kazakhstan-focused Roxi Petroleum gained 2%, after it issued new shares earlier in October. Roxi closed at 9.63p on Friday.
Last week, the price of copper fell by 2% before recovering to $2.40 per lb. Britain-based miner KAZ Minerals was hit by the market crunch this week and recorded a 7% loss, closing at 127p in London on Friday.
The upside was represented by Centerra Gold, whose shares gained almost 9% despite slower gold production in Kyrgyzstan. The final price in Toronto was 8.28 Canadian dollars.
In the banking sector, Bank of Georgia rose by almost 7% this week to 214p. The stability of the lari currency kept the market optimistic.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 22 2015 (The Conway Bulletin) – A court in Almaty shut the Adam newspaper, saying that, by publishing in Russian only, it violated the law on languages. Human rights groups said this was a pretext to curb independent media in Kazakhstan. A paper linked to the opposition, Adam was created in March 2015 after its predecessor Adam Bol was shut down in December 2014.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 16 2015 (The Conway Bulletin) – Former Armenian PM Tigran Sargsyan will take over as chairman of the Eurasian Economic Commission on Feb. 1, an appointment that highlights Russian President Vladimir Putin’s influence over the group.
The Russia-led Eurasian Economic Union (EEU) announced Mr Sargsyan’s appointment after a meeting in Astana. Mr Sargsyan succeeds Russian Viktor Khristenko.
According to media, Belarus President Alexander Lukashenko said of Mr Sargsyan’s appointment: “His candidacy is supported by the Russian President as they worked together some time ago.”
The Eurasian Economic Commission runs the EEU — which also includes Kazakhstan and Kyrgyzstan as its members — on a day-to-day basis, and Mr Sargsyan’s appointment should, at first sight, give Armenia more influence over the trade bloc.
The reality is different, though. The EEU is a Russian project and Mr Lukashenko’s words show just how influential Mr Putin is over the group. Without his support, Mr Sargsyan could not have been appointed as chairman.
Since April 2014, Mr Sargsyan has been the Armenian ambassador to the United States. He had been PM between 2008-14 but quit abruptly after his government’s reforms to the state pension programme proved unpopular.
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(News report from Issue No. 253, published on Oct. 23 2015)
ALMATY, OCT. 20 2015 (The Conway Bulletin) — Ratings agency Standard & Poor’s said it would exclude Kashagan, Kazakhstan’s biggest oil field, from its Kazakh economic forecasts because its start-up date was unclear.
The news is a setback for NCOC, the consortium developing the Caspian sea field, which includes Eni, Shell, ExxonMobil, Total, CNPC, Inpex and Kazakhstan’s state-owned company Kazmunaigas.
Karen Vartapetov, S&P’s associate director, explained.
“The project has been repeatedly delayed. We are no longer taking this oilfield into account in the rating procedures,” she said.
Operations at Kashagan begun, briefly, in September 2013, eight years behind schedule. Two weeks later a leaky pipe was discovered and operations were stopped.
The delay has been costly for NCOC, adding an estimated $4b to the current $50b cost of the project.
The Kazakh government and NCOC say commercial production at
Kashagan will resume in the second half of 2016. S&P has forecast a start date no earlier than 2018.
Rich with oil and gas reserves, Kashagan was poised to become the gem of Kazakhstan’s resource-based economy. But technical problems and low oil prices have meant this glittering prize has been delayed.
Over the past few years, international oil companies have quit the project. Now S&P’s decision not to include it in Kazakh econ forecasts further undermines its status .
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 20 2015 (The Conway Bulletin) — Eurasian Bank, a private lender in Kazakhstan linked to members of the elite, said it had bought a 100% stake in BankPozitiv, a Kazakh subsidiary of a Turkish bank. Michael Eggleton, Eurasia Bank’s CEO said the deal will not exceed $32m. In anticipation of tighter capital requirements and in an effort to cut costs, foreign banks have been selling their assets in Kazakhstan.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 23 2015 (The Conway Bulletin) — Despite all the reassuring declarations coming from Astana and the Central Bank in Almaty, volatility will be a constant for the Kazakh currency over the next months. There is just no getting away from it.
On Wednesday, Kairat Kelimbetov, Kazakhstan’s Central Bank chief, said 277.5 tenge/ $1 is an acceptable rate as long as oil prices float around $50 per barrel. Already on Friday, Brent prices fell to $48 and the tenge followed to 278.2. Over the past fortnight it has lost 1.5% against the US dollar.
Other currencies fared better this week, maintaining their value. The Georgian lari was steady at 2.39/$1 and even the Kyrgyz som had a calm week below 69/$1.
Rumours of devaluation are more worrisome in Uzbekistan, where the sum is officially stable at around 2,663/$1, but the website dollaruz.com said informal rates on the Black Market are hitting over 5,700 sum/$1.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 19 2015, ASTANA (The Conway Bulletin) — In a rare candid assessment of the economic storm battering Central Asia and the South Caucasus, Kazakh President Nursultan Nazarbayev said the outlook for Kazakhstan’s economy was now worse than it had been during the 2007-9 Global Financial Crisis.
Mr Nazarbayev’s comments, made during a meeting with Kazakh PM Karim Massimov and published on the Presidential website, were the most candid so far by one of the region’s leaders.
And any comparison with the dark days of 2007-9, when the economies of Kazakhstan and its neighbours reversed nearly a decade of sharp growth, will hit a nerve.
“Our people must know the current situation, profits at businesses are dropping, income is falling and there is the possibility of job losses,” he said.
“This is a real crisis — more powerful than in 2007-2009.”
In 2006, according to World Bank data, Kazakhstan had been powering along and enjoying GDP growth of over 10%.
This dipped to 9% in 2007 before falling in 2008 to around 3% and in 2009 to just over 1%.
Consumers and mortgage holders defaulted on debt repayments in 2008-9 and Kazakhstan’s government had to buy up bankrupt banks. Although the Kazakh economy has recovered, the experience left deep financial and psychological scars.
And the crash this time has been just as sudden as the 2007-9 Global Financial Crisis.
In 2007-9, sub-prime mortgages in the US started the rout. This time, a sudden fall in oil and commodity prices and a loss of confidence in Emerging Markets, including in China, have been the triggers.
Currencies across Central Asia and the South Caucasus have fallen by around 40%, inflation is rising and trade volumes falling.
Kazakhstan has built up cash reserves from oil and gas sales but Mr Nazarbayev said that, although social programmes would be supported, businesses would not be bailed out.
“Companies should not expect the State to give them the means to survive. This will not happen,” he said.
Other leaders across Central Asia and the South Caucasus may not have been as forthright as Mr Nazarbayev on the economic outlook but they are facing the same stormy conditions.
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(News report from Issue No. 253, published on Oct. 23 2015)
