Tag Archives: Kazakhstan

Shell cuts costs in Kazakhstan

NOV. 1 2016 (The Conway Bulletin) — British-Dutch oil company Shell said it will cut costs across the board, a move that is poised to impact the company’s expenditure in Kazakhstan. In Kazakhstan, Shell operates a handful of offshore fields, most notably the giant Kashagan, and is also involved in the Karachaganak gas and condensate field. Sustained low oil prices have hit energy companies’ ability to spend on their upstream projects.

ENDS

(News report from Issue No. 303, published on Nov. 4 2016)

Kazakh C. Bank says rate cut likely

OCT. 27 2016 (The Conway Bulletin) — In an interview with the FT, Kazakh Central Bank chief Daniyar Akishev said that inflation had slowed to under 12% and that GDP growth would measure around 0.5% this year. He also said that it was likely there would be another interest rate cut before the end of the year, another signal that the Central Bank’s confidence in the economy has strengthened after a rocky 2015.

ENDS

(News report from Issue No. 302, published on Oct. 28 2016)

Kcell’s Q3 revenue drops 13.6% in Kazakhstan

ALMATY, OCT. 21 2016 (The Conway Bulletin) — Kcell, Kazakhstan’s largest telecoms operator, posted a 13.6% drop in revenues for Q3 compared to the same period in 2015, blaming it on tough economic conditions.

Arti Ots, Kcell’s CEO, said, though, that the Kazakh economy now appears to show signs of a timid recovery.

“Kazakhstan has started to see some encouraging signs of macro recovery, with an increase in oil prices. There have also been some signals that consumer price inflation is easing and currency levels are stabilising,” Mr Ots said in a statement.

Kcell’s quarterly revenues, which stood at 36.9b tenge ($111m), were up compared to Q2 but still lower than 2015. The tenge lost 50% of its value in the second half of 2015, destroying people’s confidence in the economy.

Still, Kazakhstan’s competitive telecoms market remains tough.

“We delivered a second successive quarterly increase in service revenue and reported net growth in our subscriber base, although the economic and market environment remained challenging and we saw further year- on-year declines in revenue and profit,” Mr Ots said.

Fierce competition and price cutting have characterised Kazakhstan’s telecoms market recently.

Kcell’s subscribers grew by 1% from January to 9.9m, still below the near 11m that the company had serviced, and expenditure per subscriber declined. In Q3, the average user spent less than 1,200 tenge ($3.6) per month, down 2.7% from last year.

Sweden’s Telia Company owns a 62% stake in Kcell. It wants to sell off its assets in Central Asia after a corruption scandal involving its unit in neighbouring Uzbekistan.

ENDS

(News report from Issue No. 302, published on Oct. 28 2016)

Kazakh citizen to face trial for fighting in Ukraine

OCT. 24 2016 (The Conway Bulletin) — A court in Aktobe, north-west Kazakhstan, started hearing the trial of Maksim Yermolov, a Kazakh citizen of Russian ethnicity, for fighting alongside Russia-backed separatists in eastern Ukraine. He was arrested in Feb. 2015 after returning from Ukraine’s Dontesk region. Kazakhstan has a sizable Russian population in the north of the country and has always worried that many would prefer to separate from Kazakhstan and join Russia.

ENDS

(News report from Issue No. 302, published on Oct. 28 2016)

InfiNet to launch WiFi in Kazakh trains

OCT. 27 2016 (The Conway Bulletin) — Malta-based Russian telecoms service company InfiNet Wireless said it agreed a deal with Kazakhstan Temir Zholy, the national railway operator, to launch an onboard wireless service in Kazakhstan. InfiNet has already launched a pilot project on the segment between Astana and Borovoye, in the north of the country.

ENDS

(News report from Issue No. 302, published on Oct. 28 2016)

Azerbaijani, Kazakh, Kyrgyz governments sponsor films to promote themselves

OCT. 28 2016 (The Conway Bulletin) — Governments of the South Caucasus and Central Asia are sponsoring films to promote their various causes.

This season’s new releases includes a big screen version of Nino and Ali, the classic story of a romance between a Muslim Azerbaijani man and a Christian Georgian woman, which premiered in Baku this month.

It was sponsored by the state linked Heydar Aliyev centre. Leyla Aliyeva, daughter of president Ilham Aliyev, is listed in the credits as an executive producer.

The killings of hundreds of thousands of Armenians in eastern Turkey during the end of the Ottoman Empire, described as a genocide by

Armenia but denied by Turkey, has also been turned into a Hollywood film starring Christian Bale called The Promise. The reviews, so far, have been mixed.

In previous years Kyrgyzstan, Kazakhstan and Georgia have all directly or indirectly sponsored films to promote their causes too.

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(News report from Issue No. 302, published on Oct. 28 2016)

Oil’s Fiscal Breakeven Points

OCT. 28 2016 (The Conway Bulletin) — Hiding behind timid smiles, officials from Central Asia and the South Caucasus oil and gas producing countries continue to say that the worst may be over for the region’s economic slump.

In the medium term, Kazakhstan will constantly boast about the restart of the giant Kashagan offshore project and Azerbaijan will try everything it can to attract investments for the Southern Gas Corridor, the pipeline network that will pump gas from the Caspian Sea to Europe.

Production, however, will continue to disappoint. Output will be flat in Kazakhstan, given a lift by Kashagan finally coming back on-stream after a three year delay, and decline in Azerbaijan.

Both countries have, on different occasions, praised the decision by OPEC, the oil producers’ lobby group, to freeze production to help push prices up again.

But behind the propaganda, lies a problem, which the IMF highlighted in its latest report: these countries will face higher fiscal breakeven oil prices in the next few years, piling pressure on their economies.

In April, the IMF said that the breakeven prices that Azerbaijan, Kazakhstan and Turkmenistan would need to balance their government budgets in 2016 were $47, $88 and $42.7/barrel respectively.

In a report this week, the IMF said breakeven prices for Azerbaijan and Turkmenistan had grown to $71 and $50.4/barrel respectively.

For 2016, oil prices are unlikely to average above $50/barrel, which means that the three major energy exporters in the region will have to use their reserves to prop up their economies. Officials may be happier now than in January budget issues are far from sorted.

ENDS

(News report from Issue No. 302, published on Oct. 28 2016)

EITI tells Azerbaijan that civil society must be improved

ALMATY, OCT. 26 2016 (The Conway Bulletin) — The Extractive Industry Transparency Initiative (EITI), a global lobby group which effectively acts as an ethical watchdog for countries with economies that rely heavily on mining, oil and gas, said it will expel Azerbaijan from the organisation if it fails to reform its NGO laws within four months.

The Oslo-based EITI is influential because Western investment is often linked to compliance with its various rules. If Azerbaijan was kicked out of the group, it would threaten vital foreign investment deals.

Last year, the EITI downgraded Azerbaijan’s membership because of what it said was a crackdown on civil society.

At a meeting in Kazakhstan, the EITI said that Azerbaijan had improved some aspects of its economy and society, in line with recommendations drawn up last year during a so-called Validation process, but that more needed to be done to retain its membership.

“Azerbaijan has made important progress in opening up the oil sector and I am encouraged to hear about the recent plans for government reforms towards more transparency,” Fredrik Reinfeldt, chair of the EITI, said in a statement.

“I hope that the government will continue its recent efforts to ensure that civil society can play its proper role in this process, otherwise this progress risks being overshadowed.”

If Azerbaijan fails to keep its EITI membership, investment for its Southern Gas Corridor, a pipeline network that will pump gas from the Caspian Sea to Europe, will be at risk.

Specifically, in September the EBRD said it would reconsider a $1.5b loan for the TANAP pipeline, part of the Southern Gas Corridor that Azerbaijan is building to pump gas from the Caspian Sea to Turkey, if Azerbaijan was kicked out of the EITI.

ENDS

(News report from Issue No. 302, published on Oct. 28 2016)

Kazakh economy minister says the worst is past

ALMATY, OCT. 25 2016 (The Conway Bulletin) — Kazakhstan’s economy minister Kuandyk Bishimbayev said that the worst of an economic downturn linked to a drop in oil prices and a recession in Russia had passed, the most significant upbeat statement from the Kazakh government in two years.

Specifically, Mr Bishimbayev said that the free float of the tenge last year, which triggered a collapse in its value, had been painful but was now driving the economy and making business more competitive.

“We believe that the most difficult period has been passed for Kazakhstan’s economy. We estimate that the period was in the first quarter of this year, it was the time of the lowest oil prices,” he said.

“There has been steady growth in the economy since June this year.”

Despite Mr Bishimbayev’s upbeat message, the data points to a still sluggish economy.

Economists have predicted that Kazakhstan’s GDP growth will contract this year to nearly zero. But with oil prices pushing back up to $55/barrel, double their value from the start of the year, officials have adopted a more upbeat narrative, even if caveats are dropped in.

Talking to parliament the following day, Mr Bishimbayev said that a more efficient tax collection system was needed to increase revenues from smaller businesses which had grown used to avoiding paying VAT and other taxes.

“If we want to continue to develop our systems, of course, a certain increase in the tax burden is needed, but not at the expense of those companies which already pay full taxes but at the expense of those who work outside the system,” media quoted him as saying.

Specifically, he said a third of small businesses don’t pay their full taxes.

ENDS

(News report from Issue No. 302, published on Oct. 28 2016)

Kazakh businessman buys Turkish companies

OCT. 24 2016 (The Conway Bulletin) — Nurlan Saurambayev, CEO of SAT & Co, a Kazakh industrial conglomerate, bought two of the company’s Turkish subsidiaries, SAT&Co Holding A.S. and SAT&Co Madencilik A.S. for an undisclosed amount. Powerful businessman Kenes Rakishev owns 77.7% in SAT & Co. Mr Rakishev had increased his stake in late 2015, after forcing former CEO Rollan Mussinov to step down. Mr Saurambayev was appointed CEO in October 2015.

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(News report from Issue No. 302, published on Oct. 28 2016)