NOV. 20 2015 (The Conway Bulletin) – Kazakhstan’s pipeline monopoly Kaztransgas launched the $3.5b Beineu- Bozoi-Shymkent gas pipeline, five months early. The pipeline is important because it pumps gas from fields in the north-west to urban centres in the south.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 23 2015 (The Conway Bulletin) — PetroChina, a subsidiary of China’s state-owned energy company CNPC, said it wants to sell a 50% stake in the Central Asia-China gas pipeline for $2.4b in order to turn a profit this year, a requirement in its government mandate.
The likely buyer of the 50% stake in the Central Asia-China pipeline is another Chinese company, state-owned China Reform Holdings, Bloomberg reported.
The ownership switch shouldn’t change operations at the pipeline, which mainly pumps gas from Turkmenistan, but its does highlight both China’s ownership of energy infrastructure in Central Asia and, also, how pressure on profits in China is having an impact in the region.
China’s economy has slowed this year, undermining commodities prices around the world and triggering a switch in policy from China across various industries. In the oil and gas sector, it plans to unbundle upstream and midstream operations, a process that will have an effect on oil and gas fields across Central Asia as well as on pipelines.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 26 2015 (The Conway Bulletin) — Tengizchevroil (TCO), the consortium producing oil at the Tengiz field near Atyrau in west Kazakhstan, has stopped oil shipments via tanker from the Caspian port of Aktau because of high Eurasian Economic Union (EEU) export tariffs, a port official told Astana TV.
TCO declined to deny the story. Instead it confirmed that it was now exporting more of its oil through the CPC pipeline which pumps oil from Tengiz around the top of the Caspian Sea to Novorossiysk in Russia.
In an interview with Astana TV, a channel owned by the ruling Nur Otan party, Marat Ormanov, director at KazMorTransFlot, the shipping subsidiary of Kazmunaigas, said TCO shipment for crude oil had dropped to zero.
“TCO left in July, re-routing its entire output through the Caspian Pipeline Consortium. Other companies have followed suit and now there is almost no one left in Aktau,” Mr Ormanov said.
A news reporter for Astana TV then quoted him as saying that part of the reason that TCO had quit the Caspian Sea route was because of increased export tariffs imposed by the EEU. The EEU is the Kremlin-led trade bloc that includes Kazakhstan, Belarus, Kyrgyzstan and Armenia.
In December 2013, tankers shipped over 77,000 tonnes of oil every week from Aktau across the Caspian Sea. This year, KazMorTransFlot had planned to send a similar amount to both Makhachkala and Baku. Oil production in Kazakhstan has dropped off this year because of a slump in prices. Companies have also been looking for cheaper ways to export it.
This has coincided with the introduction of EEU rules and tariffs which many businesses have complained add a layer of bureaucracy and complicate business.
The Tengiz field is important to Kazakhstan. It is its biggest and, arguably, most successful oil project. The partners in the project are Chevron, ExxonMobil, Kazmunaigas and LukArco.
In response to the Astana TV interview, TCO told The Bulletin that it was moving away from exporting oil via Aktau.
“TCO has maximised transportation through the Caspian Pipeline Consortium system so as to take advantage of this more cost-effective route,” said Yerlan Kassym, public affairs adviser.
“As a result, transportation through other routes, including the more expensive southern route via the Aktau port, have been minimised.”
TCO declined to comment on EEU tariffs and duties. The Caspian Pipeline Consortium (CPC) is exempt from EEU tariffs because it is classified as an international pipeline.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 22 2015 (The Conway Bulletin) — Dubai-based Dragon Oil said it was considering investing in the proposed TAPI gas pipeline project which aims to deliver gas from Turkmenistan to India, an important show of Western support for the often derided project.
As reported in the FT, Dragon Oil said it has started talks with Turkmenistan over an investment in TAPI, a pipeline that will stretch 1,700km across Afghanistan and Pakistan.
“This [discussions on TAPI] has been ongoing for a long time. But now it’s very serious, things have been signed between the countries. That’s why we have shown our interest to go in,” Faisal Rabee Al Awadhi, general manager for Dragon Oil in Turkmenistan, told the FT at an oil and gas conference in Ashgabat.
Dragon Oil didn’t say what stage its negotiations with Turkmenistan were at, how much it was considering investing or when a final decision would be made. Other, bigger, Western oil and gas companies have decided not to invest in TAPI.
Dragon Oil already operates an oil field in Turkmenistan.
Turkmenistan’s state-owned gas company Turkmengas is the project leader for TAPI, which is slated to cost $10b.
Construction is supposed to start in December but it is a controversial project. Concern over security – the route crosses territory fought over by central government forces and the Taliban – has raised serious questions over whether the pipeline will ever be built at all.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 18 2015 (The Conway Bulletin) – Turkmenistan will expand its giant Galkynysh gas field by around 50% over the next few years, media reported quoting Ashirguly Begliyev, head of Turkmengas, giving gas projects to India and the EU a major boost.
Galkynysh forms the core of Turkmenistan’s gas production. Its main client is China although it wants to diversify its client base. The EU has been negotiating with Turkmenistan to try and organise for gas supplies to be sent west across the Caspian Sea, through the South Caucasus, Turkey and onto Europe.
India, likewise, has been working on a project that could see gas pumped from Turkmenistan across Afghanistan to Pakistan and finally to Indian consumers.
First, though, Turkmenistan needs to boost output at Galkynysh. Almost all of its current 60bcm of gas goes to China. A proportion of the next phase of Galkynysh’s development will also travel to China, but spare capacity is being built in.
“We are in talks with a consortium of Japanese companies and have also received proposals from Korean firms and from Petrofac company,” Reuters quoted Mr Begliyev as saying on which companies may be involved with the third phase development of Galkynysh.
Importantly, too, Galkynysh is vital for Turkmenistan’s own self image. It sees itself as an increasingly important regional energy player and has been looking to pull in more clients.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 7 2015 (The Conway Bulletin) – Turkmenistan will host the official groundbreaking ceremony for the TAPI pipeline, which will pump gas from fields in the east of the country to consumers in India, via Afghanistan and Pakistan, on Dec. 13. This is important because TAPI has been spoken of for decades.
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(News report from Issue No. 256, published on Nov. 13 2015)
OCT. 29 2015 (The Conway Bulletin) – In a snub to Moscow, Turkmen President Kurbanguly Berdymukhamedov hosted talks with Ukrainian President Petro Poroshenko on sending gas to Ukraine.
At the meeting in Ashgabat the two leaders signed several intergovernmental agreements on industrial and agricultural cooperation. Energy, though, was top of the agenda.
No deal was signed but both leaders said progress had been made.
“We are ready to increase supplies to Ukraine of products from our domestic fuel and energy complex and begin implementing joint projects in this sphere,” Mr Berdymukhamedov said according to state media.
Both Ukraine and Turkmenistan have fallen out with the Kremlin.
The Ukrainian government is locked in a protracted civil war in the east of the country against rebel forces funded by Russia. Turkmenistan has fallen out with Russia’s Gazprom over gas contracts. Earlier this year, Mr Berdymukhamedov called Gazprom an “unreliable partner”.
Russia has begun to cut gas supplies to Ukraine, forcing it to look for alternative suppliers. It has also sharply lowered its purchase of Turkmen gas over the past few years.
The biggest problem for Turkmenistan is how to avoid using Russia’s extensive pipeline network to send gas to Ukraine. It is exploring sending gas and oil products across the Caspian Sea, potentially via a new pipeline but also by ship. From there, gas and oil products can be transported to the Black Sea coast and then shipped to Ukraine.
Media said Mr Berdymukhamedov was due in Kiev next year.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 26 2015 (The Conway Bulletin) — Intergas Central Asia said it would buy back $270m of its outstanding Eurobonds due in 2017, media reported. Intergas is a subsidiary of Kazakhstan’s state owned pipeline company KazTransGas. Analysts said the buyback was positive for Intergas as it reduced its exposure to Kazakh banks.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 24 2015 (The Conway Bulletin) — TAPI consortium members signed a deal described by the Asian Development Bank as a milestone shareholders’ agreement at a meeting in Ashgabat, an important step towards turning TAPI from a paper project into a real project. The TAPI project aims to build a pipeline to pump Turkmen gas to India, across Afghanistan and Pakistan.
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(News report from Issue No. 254, published on Oct. 30 2015)
OCT. 20 2015 (The Conway Bulletin) – Turkmenistan said construction of the TAPI pipeline that will, it is hoped, pump gas from fields in the east of the country to consumers in India would start in 2016. Earlier this year, Turkmenistan had pushed for TAPI to start by the end of 2015. TAPI is a $10b project that will cross Afghanistan and Pakistan.
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(News report from Issue No. 253, published on Oct. 23 2015)
