Tag Archives: oil

Stock market: Tethys and Olisol

FEB. 22 2016 (The Conway Bulletin) — Tethys shares have surged back from their historical low of 1.63p after the company announced a change in the agreement with Olisol, which will allow Tethys to raise cash via a loan in Kazakhstan.

John Bell, Tethys’ executive chairman said that “in entering into this agreement, Tethys has gained a strong in-country strategic partner which has committed to remaining a minority shareholder.”

Olisol has thus finally and concretely become Tethys’ partner. After months of sustained low oil prices and fickle exploration and production data, Tethys was looking for a cash injection to finance its operation and restore investors’ trust.

Now Olisol and, likely, Bank RBK will complete a loan transaction for $10m and the deal with Olisol will go ahead as agreed last November. The entire deal should be completed within the next two months, according to Tethys.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Azerbaijan’s President pays visit to Tehran

FEB. 23 2016 (The Conway Bulletin) – Azerbaijani president Ilham Aliyev flew to Tehran for talks with his Iranian counterparts. Media reported that the two sides signed a memorandum of understanding on oil and gas projects.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Azerbaijan and Russia resume oil flow

FEB. 25 2016 (The Conway Bulletin) – Azerbaijan and Russia agreed to resume shipments of oil through the Baku-Novorossiysk pipeline on March 1. The agreement ends weeks of negotiations over the restart of oil supplies. Oil flows along the the pipeline give a decent insight into the state of Azerbaijani- Russian relations. Over the past few years, oil flows have been a stop start affair but now appear to have steadied, much like bilateral relations, at around 1.4m tonnes per year.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakhstan says it does not have right to buy Karachaganak stake

ALMATY, FEB. 23 2016 (The Conway Bulletin) — Kazakhstan’s government said it will not try to buy a 29.25% stake in the Karachaganak gas field that Shell inherited from BG Group after it completed a takeover earlier this month.

Previously, Kazakh officials had said the government might use its preemptive rights to buy out BG Group’s share in the field, one of the most prolific in independent Kazakhstan’s history.

Kazakhstan has now said it does not have any preemptive rights to buy the stake because the Shell-BG deal was not directly linked to the Karachaganak contract. Shell, which completed its $53b takeover of BG on Feb. 15, has not commented.

A direct change in the structure of the contract would have given the Kazakh government the right to move first and buy stakes on sale at market prices. The government used this mechanism when ConocoPhillips wanted out of the contract for Kashagan, a giant oil field in the Caspian Sea, in 2013. At the time, Kazakhstan matched a $5.4b offer by India’s ONGC Videsh and later sold the stake to China’s CNPC for the same price.

Now, the government has decided it has no right to do so.

Of course, Kazakhstan’s economic position has changed considerably since 2013. Then it was awash with spare cash. Now it is counting its coppers and flogging off chunks of previously sacrosanct state companies to pull through a deepening economic crisis.

And, for Kazakhstan, shying away from the Shell/BG stake in Karachaganak makes it look good and pro- Western business, especially important in this tight economic climate.

Karachaganak’s shareholders are Shell with a 29.25% stake, ENI with 29.25%, Chevron with 8%, Lukoil with 13.5% and Kazmunaigas with 10%.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Azerbaijan and Iran look to resolve Caspian oil field row

FEB. 23 2016 (The Conway Bulletin) — Iran and Azerbaijan have started negotiations on how to develop the disputed Araz-Alov-Sharg oil project in the Caspian Sea that has lain undeveloped for 18 years.

The talks, part of a visit by Azerbaijani president Ilham Aliyev to Tehran to boost relations, also high- light Iran’s potential to be an important partner in the region now that most international sanctions have been lifted.

The oil and gas website Natural Gas Europe (NGE), quoted two sources close to Azerbaijan-Iran negotiations on talks over the Araz-Alov- Sharg project, which Iran calls Alborz.

It quoted a source close to negotiations as saying that they had “already reached a primary agreement to develop the block jointly, but they had not finalised the details”.

For Western companies any deal between Azerbaijan and Iran to develop the site would create problems.

The SOCAR website still shows off a production sharing agreement for the field signed in 1998 by several Western oil and gas companies including BP, Statoil and Exxon.

That PSA may turn out to be worthless and, if Azerbaijan and Iran can agree on the field’s ownership, may be torn up in favour of a bilateral Azerbaijani-Iranian deal.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

CPC boosts oil from Kazakhstan to Russia

FEB. 24 2016 (The Conway Bulletin) — Oil transport company Caspian Pipeline Consortium said it will increase the volume of oil it ships from Kazakhstan to Russia by 20% in 2016, to 51m tonnes. Nikolai Brunich, the company’s CEO, said it plans to receive around 2.5m tonnes of oil from Kashagan this year.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Business comment: Refinery deals

FEB. 19 2016 (The Conway Bulletin) — Dealings at Kazakhstan’s state-owned energy company Kazmunaigas can give a deep insight into the country’s oil sector.

Last week, KMG EP, Kazmunaigas’ subsidiary dedicated to exploration and production, said in a statement it obtained a price increase for the oil it shipped in 2015 to the refineries of Atyrau and Pavlodar.

KMG RM, another Kazmunaigas subsidiary which manages the refineries, will now pay 37,000 tenge (around $105) per tonne of oil delivered to both refineries in 2015. This represents an increase of 74% in the case of the Atyrau refinery and 16% for Pavlodar, compared to an earlier agreement, which had not been approved by KMG EP’s independent directors.

KMG EP, which produces around 12m tonnes/year, sends around 2m tonnes to the Atyrau and Pavlodar refineries annually.

But the picture seems much less rosy for 2016. KMG EP said it will receive only 17,100 tenge/tonne ($48) from Atyrau and 31,923 tenge/tonne ($91) from Pavlodar this year, a steep fall from 2015’s revised prices. Although the company said these figures are not yet approved by its independent directors, this foreshadows another set of lengthy negotiations to bring the price back up.

The internal battle for profit margins within Kazmunaigas in this era of low oil prices looks like a battle for scraps. And in 2016, Kazakhstan forecasts a fall in production and lower prices for crude oil to be refined.

This may dent the budget of KMG EP, although it will be bolstered, overall, by a devaluation in the tenge. It earns cash in US dollars and pays most of its workers in tenge.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakhstan lowers export duty

FEB. 15 2016 (The Conway Bulletin) – Kazakhstan will lower its oil export duty in March, Yerbolat Dossayev, minister of economy, said. He said the export duty will now be lowered to $30/tonne from $40/tonne. Mr Dossayev also said that the export tax would be scrapped altogether if the price of oil falls below $25/barrel. Oil producers in Kazakhstan have stopped producing oil because of high export taxes and low prices.

ENDS

(News report from Issue No. 268, published on Feb. 19 2016)

Tecnimont to build plant in Azerbaijan

FEB. 5 2016 (The Conway Bulletin) – Italy’s Maire Tecnimont signed a $180m deal with Azerbaijan’s SOCAR Polymer to build a polyethylene plant near Baku, local media reported. The plant is part of SOCAR’s petrochemical complex in Sumgayit, 30km north of Baku. SOCAR Polymer is a subsidiary of SOCAR, Azerbaijan’s state-owned oil and gas company.

ENDS

(News report from Issue No. 267, published on Feb. 12 2016)

TCO posts production record in Kazakhstan

FEB. 9 2016 (The Conway Bulletin) – Tengizchevroil, the Chevron-operated oil project near Atyrau in western Kazakhstan, produced a record 27.16m tonnes of oil in 2015, up from 26.7m tonnes in 2014, media reported quoting the company. The data underlines Tengizchevroil’s status as Kazakhstan’s biggest oil exporter. It was supposed to have been overtaken by the giant Kashagan oil field in the Caspian Sea by now but faulty gas pipes have had to be repaired on this project, delaying production until either the end of this year or 2017.

ENDS

(News report from Issue No. 267, published on Feb. 12 2016)