Tag Archives: oil

Despite promises, oil output falls in Azerbaijan

SEPT. 30 2015 (The Conway Bulletin) – Azerbaijan’s oil production fell by 3.1% between January and August this year compared to the same period in 2014, a source at the state’s Statistics Committee told Reuters, more bad news for the government as it tries to work out a strategy to deal with a regional economic downturn.

Oil exports are the mainstay of the Azerbaijan economy, and a collapse in oil prices over the past year has hit it hard.

It has cut government projects, slashed the value of its currency by a third and warned of low growth rates for the next couple of years.

Alongside the decline in revenue earned from exports, Azerbaijan is also dealing with a drop in production. This drop is mainly linked to a slowdown in production at the Azeri-Chirag-Guneshli (ACG) fields which are operated by BP.

The source told Reuters that Azerbaijan had produced 22.1m tonnes of oil in the first eight months of the year compared to 22.8m tonnes in 2014.

BP has tried to increase outflows from ACG over the past couple of years but without success, drawing criticism from Azerbaijani President Ilham Aliyev.

ENDS

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

OPEC asks Kazakhstan for oil cut

SEPT. 30 2015 (The Conway Bulletin) – Vladimir Shkolnik, the Kazakh energy minister, said OPEC members asked Kazakhstan to cut its oil production in a coordinated attempt to increase oil prices. Kazakhstan has said oil production would be slightly lower this year.

ENDS

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

Kazakhstan to cut in tax for oil producers

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.

ENDS

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

FM highlights Azerbaijan’s global energy role

SEPT. 30 2015 (The Conway Bulletin) – Highlighting Azerbaijan’s enhanced role in the global energy system, foreign minister Elmar Mammadyarov said in a speech at the UN General Assembly in New York that the country had become a “crucial player” in the system. Europe wants to increase imports of gas from Azerbaijan.

ENDS

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

Stock market: KAZ Minerals, Central Asia Metals

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.

ENDS

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

Oil field in Kazakhstan to stop expansion

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.

ENDS

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

BP and Azerbaijan start renegotiating ‘deal of the century’

SEPT. 18 2015 (The Conway Bulletin) — SOCAR, Azerbaijan’s state-owned oil and gas company, said it is negotiating the renewal of the so called ‘contract of the century’ it signed with BP over 20 years ago.

The contract concerns the most important set of oil fields in Azerbaijan, Azeri-Chirag-Guneshli — also known as ACG — which is managed through a consortium in which BP has the largest share (35.8%) and SOCAR owns 11.6%.

“We are in talks,” said Rovnag Abdullayev, SOCAR’s chairman, when reporters asked him about the negotiations over the licence.

“Until 2024, BP is the operator at ACG. BP is likely to remain the operation in the future as well.”

BP has not commented but its management of the project is important both for the company and Azerbaijan, which is reliant on oil exports for its earnings.

It may be early to start negotiating an extension to the 30-year Production Sharing Agreement signed in 1994 but BP and Azerbaijan need to cement their fickle relationship.

An economic crisis, triggered by a steep fall in the value of oil over the past year, has hit Azerbaijan, forcing its manat currency to devalue by a third in February.

It has also cut its government budget and spent millions of dollars propping up its ailing currency.

Data from the oil rigs also makes for a dispiriting read. In the first eight months of 2015 oil production decreased by 2.5% compared to the same period in 2014.

ACG is the primary oilfield for Azerbaijan and in 2012 Azerbaijan’s president Ilham Aliyev accused BP of having committing “grave mistakes” in its management of the project. In Jan.-Aug. 2015, production at ACG was down by 2.2%, compared to 2014. BP has tried to maintain production by replacing staff and increasing investment in the fields but it has been unable to stop ACG’s decline.

Last week, BP suspended operations at Chirag for 20 days due to maintenance work which will hit output again.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Turkmenistan builds oil terminal

SEPT. 18 2015 (The Conway Bulletin) — Construction work at a new oil terminal in Turkmenistan’s Lebap region, near the border with Afghanistan, is close to completion, the Ministry of Petroleum said. The terminal will have a capacity of 540,000 tonnes of oil and will boost Turkmen export options.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Fire breaks out near Zhanaozen, Kazakhstan

SEPT. 18 2015 (The Conway Bulletin) – A fire broke out at an oil pit outside Zhanaozen in western Kazakhstan. High winds spread the fire over a 5 square km area. Media said the fire injured 2 people.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Business comment: Kazakhstan & The Oil Markets

SEPT. 23 2015 (The Conway Bulletin) — Low oil prices hit Kazakhstan again, as it revised downwards oil production numbers.

Iran’s re-emergence into the global markets will keep prices low according to a spokesperson from the Ministry of Energy in Astana and this means the Kazakhstan will lower production.

“Oil output is expected to reach 79.5m tonnes in 2015,” the spokesperson told Reuters. This is

1m tonnes less than earlier predicted and almost 2% less than in 2014. And it could get worse, as the government has not ruled out a further reduction in production, should prices continue to fall.

This has an adverse effect on Kazakhstan’s economy.

First, foreign investors reduce their financial positions because their assets lose value, either because of low oil prices or due to the devaluation of the local currency. Foreign investors have already started to leave Kazakhstan,

as TeliaSonera, Samsung, Honda, have shown in the past fortnight.

Second, the country’s financial position weakens further. It has to spend foreign reserves to protect its currency from falling further.

Third, the domestic oil sector marks some projects, which have been labelled uneconomic, as on- hold until oil prices rise. This, in turn, means lower revenues.

When it comes to oil, Kazakhstan is a price-taker. Its fate will depend on how it manages to survive what could be a long period of cheap oil.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)