SEPT. 29 2015 (The Conway Bulletin) – The Kazakh government has said it is considering cutting taxes for oil producers to encourage them to raise output. Some energy companies operating in Kazakhstan, especially the smaller ones, have said they will not produce oil until prices recover. Kazakhstan has cut its projected oil production in 2015 by 1m tonnes to 79.5m tonnes.
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(News report from Issue No. 250, published on Oct. 2 2015)
OCT. 1 2015 (The Conway Bulletin) – The OSCE, Europe’s main election and media rights watchdog, sent a note to the Kazakh government asking it not to cut access to news website which have been critical of the authorities. The OSCE has previously criticised Kazakhstan for is media rights record.
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(News report from Issue No. 250, published on Oct. 2 2015)
OCT. 1 2015, ALMATY (The Conway Bulletin) — The collapse in the value of the Kazakh tenge over the past 18 months has not only hurt businesses and consumers in Kazakhstan. Charities that collect cash in tenge but accrue costs in US dollars and other foreign currencies are also having to cut services — often life-saving ones.
In an interview with The Conway Bulletin, Ilyas Kubriyanov, head of the UnityKZ charity, said that the cost of sending ill children abroad for treatment had spiralled.
“We are having problems, of course, as foreign hospitals invoice in dollars but we collect 90% of our donations in tenge,” he said. “Consequently, the cost of treatments is increasing.”
UnityKZ helps pay for children who have cancer or other serious illnesses to travel abroad for treatment. Mr Kubriyanov, who set up the charity in 2009, said that there are currently 10 children waiting for treatment.
“Because of the currency situation, the money we collect loses its impact,” he said. “Everything has become much more expensive.”
The Kazakh Central Bank released the tenge from its US dollar peg in August, triggering a sharp devaluation. It is trading at around 272/$1 compared to 188/$1 on Aug. 19.
It also devalued its currency in February 2014. The tenge is now worth nearly half its Feb. 2014 value.
A sharp drop in oil prices and a recession in Russia has battered economies in Central Asia and the South Caucasus. Statistics show unemployment and inflation rising but the impact is felt across Kazakh society.
“Recently, we asked parents of sick children to think about another type of treatment to have or another country to aim for,” Mr Kubriyanov said. “One child was transferred to China recently, but they also have some difficulties with their currency there.”
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(News report from Issue No. 250, published on Oct. 2 2015)
SEPT. 30 2015 (The Conway Bulletin) — Google launched youtube.kz, a Kazakh language version of video streaming service YouTube. Maxim Machkasau, development manager for Google in Kazakhstan, said: “YouTube is very popular in Kazakhstan, especially among people aged 18-24 years.” But social media has come under scrutiny in Kazakhstan for being used by radicals to spread extremist Islamic propaganda.
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(News report from Issue No. 250, published on Oct. 2 2015)
OCT. 1 2015 (The Conway Bulletin) — It’s hard to believe that Kazakhstan has really moved to a free-floating currency market. The roller-coaster of the past 40 days has hit the Central Bank’s credibility. Investors and citizens alike are wary of the potential consequences of their tenge-denominated portfolios.
And over the last two weeks, the Central Bank has sold around $1b to keep the tenge away from the frightening 300/$1 floor it momentarily touched on Sept. 16.
The tenge has since traded at around 271/1$. In August, the Central Bank chose to move away from a dollar peg of around 188/$1 to avoid draining its reserves. Now, it seems, the tenge has found another, unofficial, peg.
In other countries, the situation was fairly stable this week. The Kyrgyz som kept its rate through the week at around 69/$1. The Georgian lari held below 2.39/$1.
In Tajikistan, the Central Bank seems to be allowing a weekly 0.5% decline for the somoni, now at around 6.5/$1.
And finally, in a recent Central Bank survey, 41% of Tajikistan’s population is in favour of letting the somoni float free.
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(News report from Issue No. 250, published on Oct. 2 2015)
SEPT. 26 2015 (The Conway Bulletin) – Kazakhstan’s Olympic Committee reportedly appointed Timur Kulibayev, son-in-law of President Nursultan Nazarbayev and a potential successor, as its head. Earlier this year Almaty lost to Beijing in its bid to host the 2022 Winter Olympics. The bid boosted both the profile of Kazakhstan and also of its Olympic Committee.
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(News report from Issue No. 250, published on Oct. 2 2015)
OCT. 2 2015 (The Conway Bulletin) — The three countries in the Central Asia and South Caucasus region with currencies floating freely (or partially so) have all increased their key interest rate.
Kazakhstan was the last to do so, bringing its key interest rate to 16% from the previous level of 12%. The 12% mark had only been set at the start of September, highlighting just how seriously the Kazakh Central Bank had underestimated the threat from inflation in its initial calculations. The Kyrgyz Central Bank raised its benchmark rate to 10%, up by 2 percentage points. Last week, Georgia increased rates to 7% from 6%.
The bottom line is that all three countries fear inflation. Kyrgyzstan has tried to hold off, while the Central Bank intervened lightly in the currency market to defend the som, but both foreign trade and remittances from abroad have declined, putting the Kyrgyz economy in an uncomfortable position.
Although probably necessary, these measures might not be enough to avoid climbing inflation in the coming months.
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(News report from Issue No. 250, published on Oct. 2 2015)
OCT. 2 2015 (The Conway Bulletin) — Mining companies dominated the news this week from stock markets selling shares in Central Asian and South Caucasian companies.
London-listed KAZ Minerals lost 30% in one week before rising slightly to 91p. What was striking, though, was that the trade volume surpassed 25m shares, a weekly turnaround that was only seen during a surge in August and during another sharp fall in mid-January.
Central Asia Metals was essentially stable this week in London at around 155-158p.
Toronto-listed Centerra Gold fell again. This week, the Kyrgyzstan- focused mining company lost around 6% to end the week at 7.29 Canadian dollars.
Central Asia-focused oil companies showed mixed results. Nostrum Oil & Gas shares lost around 4% this week, down to 462p. This fall was linked to the ongoing saga with Tethys Petroleum on the takeover.
Kazakhstan-focused Roxi Petroleum performed well this wekek, as it climbed back to 10p, an 18% surge in seven days, triggered by the positive interim results for H1 2015 it published on Sept. 29.
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(News report from Issue No. 250, published on Oct. 2 2015)
SEPT. 29 2015 (The Conway Bulletin) — Kazakhstan’s deputy energy minister Uzakbai Karabalin said Tengizchevroil (TCO) could freeze its expansion project due to low oil prices. TCO is the consortium, lead by the US’ Chevroil, developing the Tengiz oil field in West Kazakhstan. TCO accounts for roughly one-third of Kazakhstan’s oil production. Freezing the upgrade project may have a significantly negative effect on Kazakhstan’s oil output.
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(News report from Issue No. 250, published on Oct. 2 2015)
ALMATY, SEPT. 25 2015 (The Conway Bulletin) — In an effort to re-invigorate itself, London-traded KMG EP appointed the tech-savvy Kurmangazy Iskaziyev as its new CEO.
KMG EP is the upstream branch of Kazakhstan’s state-owned energy company Kazmunaigas. The company’s earnings have dropped because of low oil prices and a decline in production. Some upstream operations have been suspended.
Mr Iskaziyev replaces Abat Nurseitov, who was CEO when the company needed to generate cash quickly. It sold its stake in the Kashagan oil project and issued Eurobonds to raise capital.
Christopher Hopkinson, KMG EP’s chairman, said Mr Iskaziyev was a veteran of the company, having served as the CEO of Embamunaigas.
“Mr Iskaziyev has extensive experience in applying new technologies and increasing production efficiency,” Mr Hopkinson said.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 250, published on Oct. 2 2015)
