Tag Archives: Kazakhstan

Kazakh oil service company loses money

OCT. 11 2016 (The Conway Bulletin) – Oil service companies owned by Kazakhstan’s Kazmunaigas posted a 12% drop in revenues over the past two years, mostly due to sustained low oil prices, Kazmunaigas chairman Sauat Mynbayev said. Mr Mynbayev said that this trend should have triggered layoffs, but under government mandate the companies will not cut jobs. Loss- making Ozenmunaigas will maintain 9,500 workers on its payroll.

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(News report from Issue No. 300, published on Oct. 14 2016)

Kazakh President establishes peace prize

OCT. 10 2016 (The Conway Bulletin) – Unable to win the Nobel Peace Prize that he has always reportedly considered himself worthy of for voluntarily surrendering the nuclear weapons that he inherited after the fall of the Soviet Union, Kazakh President Nursultan Nazarbayev has instead set up his own $1m prize for world peace and nuclear disarmament. He gave the inaugural award to King Abdullah of Jordan for taking in 1.5m Syrian refugees and for his work in making the Middle East a nuclear-free area.

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(News report from Issue No. 300, published on Oct. 14 2016)

Kazakhstan to extend visa-free travel

OCT. 11 2016 (The Conway Bulletin) – Kazakhstan will expand its visa-free regime next year, in an effort to boost tourism, the ministry of investment and development said. The new regulations will expand visa-free travel beyond the current 20 developed economies, to include all OECD countries from January 2017.

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(News report from Issue No. 300, published on Oct. 14 2016)

Emir’s falcon dies in Kazakhstan

OCT. 4 2016 (The Conway Bulletin) – A prized hunting falcon belonging to Tamim bin Hamad Al Thani, Emir of Qatar died in a Kazakh customs warehouse. The precise reasons for the falcon’s death have not been released to the public. The Emir was a regular visitor to Kazakhstan, where he liked to hunt with falcons near Lake Balkhash. Kazakhstan is a popular destination for Middle Eastern rich with a penchant for falconry.

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(News report from Issue No. 299, published on Oct. 7 2016)

Azerbaijan and Kazakhstan’s oil and gas

OCT. 7 2016 (The Conway Bulletin) – As shown in our charts this week, markets were upbeat, especially due to a steady increase in oil prices over the past two weeks, following a landmark agreement among the world’s top oil exporters.

OPEC, the exporters’ lobby group, decided to cut oil output by around 1.5% in an effort to put pressure on the US dollar and send oil prices higher.

This is OPEC’s first production cut in eight years, since the 2008 Global Financial Crisis. And the decision is an important one.

It marks a formal agreement between Saudi Arabia and Iran, whose diplomatic spats had been at the core of OPEC’s inability to decide in the past year.

It also has an important effect on countries around the Caspian Sea.

Azerbaijan has quickly eroded its reserve base, pumping its oil money into the budget to contain its currency crisis. This could have not lasted much longer. Now, if oil prices continue to float around $50/barrel, a good 20% higher than two months ago, transfers from the oil fund can slow down and the leadership can breathe.

Perhaps out of excitement from the impending re-start of Kashagan in the Caspian Sea, Kazakhstan is also rallying on higher oil prices, cutting interest rates and transfers from its oil fund into the budget.

Two caveats, however, are needed for Azerbaijan and Kazakhstan. First, don’t believe in any proposal from these two non- OPEC countries on freezing or cutting production. If their output falls it is because of economics.

Second, you need to wait until their mega projects, from Kashagan to Shah Deniz II, come online before making long-term assumptions on the energy might held by Kazakhstan and Azerbaijan.

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(News report from Issue No. 299, published on Oct. 7 2016)

Stock market: Centerra Gold, Thompson Creek

OCT. 7 2016 (The Conway Bulletin) – Centerra Gold’s stock price has been on a rollercoaster this summer, closely following the ups and downs of the price of gold.

This week, both fell. Centerra contracted by 9% to 6.49 Canadian dollars and gold registered an unusual 5% fall to $1,254.38/troy ounce on Thursday. After a tense spring, when the Kyrgyz government and Centerra were at loggerheads over permits and court cases, calm now appears to reign. Importantly, though, this year Centerra has actively tried to diversify its portfolio away from Kyrgyzstan, investing in Turkey and in the US.

As part of the financing for the acquisition of Colorado-based Thompson Creek, Centerra issued new shares which analysts said will dilute the share that Kyrgyzaltyn, the government-owned gold miner, owns in Centerra from 32% to approximately 28.8%.

The deal, inked in July, put relations between the company and the government under strain once again.

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(News report from Issue No. 299, published on Oct. 7 2016)

Bashneft looks for fuel in Kazakhstan

OCT. 4 2016 (The Conway Bulletin) – Russian oil company Bashneft said it will explore the possibility of buying into the petrol station market in Kazakhstan. Bashneft already operates in Kazakhstan, where it produces around 500,000 tonnes of petroleum products. Sales representative Kirill Kasterin said the company now wants to sell petrol under its own brand. Bashneft owns around 70 filling stations in Russia.

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(News report from Issue No. 299, published on Oct. 7 2016)

Comment: Regional economies begin to steady, writes Sorbello

OCT. 7 2016 (The Conway Bulletin) — Central Banks across Central Asia and the South Caucasus seem to have switched off their crisis mode, as inflation slows, oil prices pick up and remittances begin to regenerate.

Excited about the imminent re-start of the Kashagan offshore oil project, Kazakhstan is looking stronger, after months of uncertainty regarding its currency and its budget stability.

An important sign of the country’s recovering health was the rate cut by Kazakhstan’s Central Bank this week, which said that with inflation back into the 6 – 8% band that it was targeting and that monetary policy could be eased.

This decision has been in the Central Banker’s thinking over the past few weeks. That much is clear. Daniyar Akishev has been showing, for the first time, a more confident and determined tone.

And countries less impacted by oil prices, from Armenia to Kyrgyzstan, have also tried to boost their rather slow economic activity by lowering or keeping low interest rates in the past weeks.

All currencies from the region have been hit by a stronger US dollar over the past two years, and their depreciation led inevitably to a sharp increase in consumer prices.

Some — such as Azerbaijan, Kazakhstan, Kyrgyzstan and Georgia — needed strong monetary interventions. Others, such as Tajikistan, Armenia and Uzbekistan stabilised at a comparatively faster pace.

Last month, Russia’s Central Bank said migrant worker remittances to Kyrgyzstan had increased by 21%, reflecting a higher migration rate. On the other hand remittances to Tajikistan and Uzbekistan fell because of a drop in the number of migrants. Perhaps this is the Eurasian Economic Union effect?

Kyrgyzstan and Tajikistan are among the top remittance-dependent countries in the world.

As the ship seems steadier, however, countries across the region will have to cope with more domestic problems, chiefly in the banking sector and other private sectors hit hard by the economic downturn.

As shown this week with the bankruptcy of Bank Standard, Azerbaijan’s financial sector doesn’t seem to have fully recovered from the crisis. And in western Kazakhstan, where oil is the job creator, a month-long strike just ended with the workers obtaining higher salaries and the company winning state tenders. There is still work to do.

By Paolo Sorbello, Deputy editor, The Conway Bulletin

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(News report from Issue No. 299, published on Oct. 7 2016)

EuroChem to increase production in Kazakhstan

OCT. 4 2016 (The Conway Bulletin) – Switzerland-based fertiliser producer EuroChem said it would increase investment in its phosphate mine in southern Kazakhstan to try to drive up production. EuroChem produces 640,000 tonnes of phosphate rock annually at its Zhambyl mine. It wants to more than double this.

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(News report from Issue No. 299, published on Oct. 7 2016)

Kazakh government defuses worker unrest

ALMATY, OCT. 5 2016 (The Conway Bulletin) — Betraying its nervousness over labour disputes, the Kazakh government stepped in to end a strike by 2,000 workers at an oil company near Zhanaozen in the west of the country.

To end the strike, the government promised the company employing the workers a major contract boost which will allow it to increase salaries — meeting the strikers’ demands.

The strike over pay had been building, sporadically, for weeks but had only been supported by a few dozen people, some of them on hunger strikes. It was only on Sept. 30, when 2,000 strikers rallied for the first time demanding higher salaries from Burgylau, a local subcontractor for the state-owned Ozenmunaigas, that the government sent senior offi- cials to defuse what to them had become an intolerable scenario.

Zhanaozen, a scruffy town built in Soviet times to house labourers working on nearby oil fields, is seared into the Kazakh national conscience.

In 2011 clashes between protesters and police killed at least 15 people and plunged the government into perhaps its most serious post-Soviet crisis. Hundreds of riot police poured into the region and emergency powers were imposed. Eventually, the government was forced to guarantee jobs and wages in the region.

Importantly the clashes in Zhanaozen in 2011 have defined Kazakh labour disputes. Since then big business and the government have shown an unwillingness to face down worker demands.

And so it proved again. A Burgylau executive had told workers that the company was unable to pay workers any more because it wasn’t making a profit. This changed, though, after a visit from Alik Aidarbayev, governor of the western Mangistau region, who offered Burgylau another $18m worth of contracts in exchange for meeting the workers’ demands.

Burgylau is a subsidiary of KazPet- roDrilling.

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(News report from Issue No. 299, published on Oct. 7 2016)