Tag Archives: oil

Business comment: Opec, Kazakhstan and Azerbaijan

OCT. 23 2015 (The Conway Bulletin) — When OPEC calls, Kazakhstan and Azerbaijan are unlikely to answer.

OPEC, an organisation for oil exporting countries, is seeking to coordinate a cut in production with non-OPEC countries to lift oil prices.

Acting as a cartel, OPEC can determine production levels in order to control global oil prices. It has done so repeatedly over the past decades.

Strapped for cash and reliant on oil exports, Kazakhstan and Azerbaijan are not OPEC members and do not enjoy the same market power as Saudi Arabia or Russia.

Because their action would have little effect on oil prices they are unlikely to play OPEC’s game, according to Daniel Yergin, vice- chairman of the IHS consulting company and one of the most authoritative voices on Caspian energy issues.

“I think they will not cooperate. They (Azerbaijan and Kazakhstan) are typical non-OPEC countries who simply produce at a maximum they can,” Mr Yergin told Reuters.

Lower oil prices and ageing fields have pushed production numbers down in Kazakhstan and Azerbaijan (minus 2% and 3% respectively) and they simply cannot afford to arbitrarily cut back production in concert with OPEC.

The economies of these two Caspian countries are heavily reliant on hard currency revenues from oil exports. They’ll want to keep oil production at a maximum.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Kazakhstan and Russia agree to explore north Caspian for oil

OCT. 15 2015 (The Conway Bulletin) – Russian President Vladimir Putin flew to Astana where he signed a deal with Kazakh leader Nursultan Nazarbayev to jointly explore and develop the north Caspian Sea for hydrocarbon reserves.

The deal, signed before a meeting of leaders from the former Soviet Union, came roughly a week after Kazakhstan also hosted Ukrainian president Petro Poroshenko. He signed deals with Mr Nazarbayev to increase cooperation in energy and aerospace. The timings of the two leaders’ visits to Astana highlights just how pressured the diplomatic space that Kazakhstan has to operate in is. It needs to keep relations with both Ukraine and Russia, who are locked in a proxy war in eastern Ukraine, sweet.

“We have big plans on joint oil production in the Caspian Sea,” Mr Putin said after signing the deal.

Kazakhstan and Russia also signed a deal for the Russian military to test missiles that would spread debris over a patch of Kazakhstan.

A week earlier, Mr Poroshenko had been in town talking up ties with Kazakhstan. This week, Kazakhstan’s ministry of defence said that it had signed a deal with Ukraine to boost cooperation in aviation.

Mr Nazarbayev has previously touted Kazakhstan as the ideal place for trying to thrash out a peace deal between Russia and Ukraine. There has been no formal move to hand this role to Kazakhstan but but leaders do apparently appear relaxed about flying to Astana in quick succession.

ENDS

(News report from Issue No. 253, published on Oct.16 2015)

Stock market: KAZ Minerals, Nostrum, KEGOC

OCT. 9 2015 (The Conway Bulletin) — The biggest mover in the stock markets for Central Asia and the South Caucasus was London-listed KAZ Minerals, which gained a staggering 65% since the beginning of October at 145p on Friday. Its performance was in line with most commodity producers which were hit by the Glencore slump last week.

Kazakhstan-focused Nostrum Oil & Gas was stable this week at around 524 pence, after rebounding from a sharp drop last week. Its failed takeover offer for Tethys Petroleum affected its performance in the market.

Polyus Gold continued its roller- coaster to end the week at 198 pence. Polyus has shown a volatility of +/- 3% over the past three weeks.

In local markets, KEGOC, Kazakhstan’s state-owned electricity company became one of the strongest players in KASE, gaining over 25% in the past three weeks. However, because its stocks are denominated in tenge, the value of its assets has not fared as well as it seems. Speculative moves behind the multi-million dollar transactions of the past weeks have turned KEGOC into an appealing investment in a market marred with worsening assets.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Wood Group to supply facilities at Kazakh oil field

OCT. 7 2015 (The Conway Bulletin) — Scotland-based Wood Group won a service contract to supply an automated system for crude storage facilities at the Tengiz oil field in Western Kazakhstan. It said the automated system would increase storage capacity. Bechtel, a US-based engineering company, signed the multimillion dollar deal with Wood Group.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Japan to explore Kazakhstan

OCT. 5 2015 (The Conway Bulletin) — State-owned Japan Oil, Gas and Metals National Corporation said it will explore Kazakhstan for mineral deposits. Preliminary investigations will be conducted, jointly with Kazakhstan’s state-owned company Kazgeologiya, in 2016. Japan has bought large amounts of oil from Kazakhstan this year.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Graphene Nanochem secures contract in Turkmenistan

OCT. 6 2015 (The Conway Bulletin) — London-listed Graphene Nanochem secured a service supply contract with Malaysia’s Scomi Oiltools, for $384,000 to help drill oil wells in Turkmenistan. Graphene Nanochem has been working in Turkmenistan for a few years.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

BP stops maintenance in Azerbaijan

OCT. 8 2015 (The Conway Bulletin) — BP said it had temporarily stopped planned maintenance work at one of its platforms operating in Azerbaijan’s Azeri-Chirag-Guneshli (ACG) offshore oil field. BP, which operates ACG and holds a 35.8% share in the consortium, had said that its planned maintenance work at the Chirag platform which would shut the platform for 20 days from Sept. 17. It is unclear if the maintenance work has been completed.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Azerbaijan’s oil output falls in BTC

OCT. 8 2015 (The Conway Bulletin) — Oil flows through the Baku-Tbilisi- Ceyhan pipeline fell by 1% in the first nine months of 2015 compared to the same period last year, an unnamed source at Azerbaijan’s state-owned energy company SOCAR told Reuters. Oil output in Azerbaijan has been falling over the past few years.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Tethys shareholders reject Kazakh companies’ final buy-out offer

ALMATY, OCT. 7 2015 (The Conway Bulletin) — London-listed Nostrum Oil & Gas withdrew its offer to buy Tethys Petroleum, ending hopes of a merger between the two Kazakhstan- focused companies.

Shortly after Nostrum announced it had scrapped its bid, Kazakhstan- based AGR Energy submitted an offer to buy a large chunk of equity in Tethys for a premium. The AGR offer, helped Tethys shares rebound by 12% on the Canadian stock market.

Earlier the final word on the long- running Nostrum bid came from Tethys’ largest shareholder, Pope Asset Manager. It said it did not support the latest offer of 0.147 Canadian dollars per share that would have valued the company at $49.5m.

Nostrum had tried to buy Tethys’ shares for two months but a deal slipped away as the sustained oil price collapse ate into the value of energy companies in general and Tethys shares in particular.

Both companies have their main operations in Kazakhstan. The value of their assets has decreased due to the weakening Kazakh tenge against the US dollar.

Nostrum’s withdrawal was an opportunity for AGR, a company linked to the Assaubayev family. It put in an offer of $20m for a large portion of Tethys’ equity, valuing shares at 0.165 Canadian dollars. In addition, AGR also proposed a $5m loan to support short-term liquidity and the option of buying more shares.

Earlier in August, Tethys failed to conclude a $47.7m refinancing deal with AGR, which would have granted the Kazakh company a controlling stake in Tethys.

The Assaubayev family was involved in Kazakhstan’s gold sector but has since switched its focus to oil. In August 2014, it invested $62.5m into British company Max Petroleum becoming a 51% shareholder.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Business comment: Analysts see oil output drop

OCT. 1 2015 (The Conway Bulletin) — In the past few months of tumbling oil prices, analysts have discussed Azerbaijan and Kazakhstan and debated whether they could keep oil production steady.

The PRIX index, a young and fully independent barometer of the 20 major oil exporting countries, forecasts a fall in oil exports in Q4 2015 for both Azerbaijan and Kazakhstan, a stark change after a positive forecast in Q3 2015.

PRIX’s methodology is simple, as it collects forecasts on oil exports from around 300 analysts around the world. It has rapidly gained credibility due to the volume of data it generates.

John Friedman, analytical advisor at PRIX, said: “We’re still in a bear market for oil.”

He noted that exporters do not yet want to give in and cut exports despite low oil prices.

Indra Overland, project director at PRIX, said the situation in Azerbaijan was particularly worrisome.

“Oil production in Azerbaijan is clearly falling. This is due to resource depletion, though one could also argue that it is indirectly due to the unattractive climate for exploration and investment,” Mr Overland said.

Importantly, the PRIX index also highlights the agreement, or lack thereof, between the surveyed analysts. It is interesting to note that disagreement among analysts covering Azerbaijan and Kazakhstan has risen significantly, as oil prices and export data keep falling.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)