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Kyrgyz president supports constitutional changes

AUG. 1 2016 (The Conway Bulletin) — Kyrgyz President Almazbek Atambayev said that he supported a referendum that would tweak the constitution and shift more power from the president to the PM. In the aftermath of a revolution in 2010, Kyrgyzstan voted to give parliament and the PM more power, a shift to what Western analysts have often dubbed as Central Asia’s first parliamentary democracy. Mr Atambayev said changes were needed to stop a new president taking too much power.

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(News report from Issue No. 292, published on Aug. 12 2016)

Azerbaijan’s CBank raises interest rates to 9.5%

AUG. 8 2016 (The Conway Bulletin) — Azerbaijan’s Central Bank raised its key interest rate to 9.5% from 7%, its highest level since 2008, in an effort to bolster its currency.

Azerbaijan’s economy is based on oil, meaning that a fall in prices has hit its economy hard. Analysts have predicted a recession this year, the first since the 1990s.

The manat currency was devalued twice last year. It had been strengthening throughout 2016 but has lost around 10% of its value since June and is, according to Bloomberg, now one of the five worst performing currencies. The Central Bank increased its key interest rate to 5% from 3% in February.

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(News report from Issue No. 292, published on Aug. 12 2016)

KazTransOil revenues drop

JULY 28 2016 (The Conway Bulletin) — Kazakhstan’s state-owned oil pipeline operator KazTransOil said its revenues fell by 1.2% to 96b tenge ($273m) in H1 2016, compared to the same period last year. KazTransOil, part of the Kazmunaigas group of companies, also said that it transported 10% less oil in H1 2016.

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(News report from Issue No. 291, published on Aug. 1 2016)

Greece says Azerbaijan’s SOCAR deal to buy gas pipelines will happen in September

JULY 22 2016 (The Conway Bulletin) — Italy’s Snam could make an offer to buy 17% of Greek gas distributor DESFA by the end of September, salvaging plans by Azerbaijan’s SOCAR to buy Greece’s pipeline network.

Earlier this month, SOCAR officials had suggested the deal, which is considered vital for Azerbaijani aspirations to supply gas to Europe, was off because a lower-than-expected

price rise by the Greece government for consumers had undermined its value.

But Stergios Pitsiorlas, chairman of the state Hellenic Republic Asset Development Fund, told Bloomberg that the Snam-SOCAR tandem will buy a 66% share in DESFA.

Snam declined to comment.

SOCAR officials flew into Athens this week to discuss the deal. News reports from both Greece and Azerbaijan have called the negotiations ‘tense’.

In 2013, SOCAR won a bid to buy 66% of DESFA, Greece’s gas distributor.

The deal was later frozen by the European Commission, citing 2009 regulation which stops integration between gas suppliers and distributors.

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(News report from Issue No. 291, published on Aug. 1 2016)

Dispute threatens Kazakh refinery company’s sale of Romanian refinery

JULY 27 2016 (The Conway Bulletin) — A legal battle between Kazakhstan’s KMG International and the Roma- nian government risks stalling a $680m deal to sell a majority stake in the Kazakh company’s refinery to China’s CEFC.

KMG International, formerly known as Rompetrol, is preparing to lodge a lawsuit against the Romanian government over the seizure in May of its assets, according to the FT.

The Romanian government has said the Petromidia refinery, the largest in the country, was illegally privatised in the early 2000s before Kazmunaigas bought Rompetrol.

KMG International has now submitted a legal note to the Romanian government that will escalate the dispute.

“Romania is using its governmental power to undermine that transaction and re-nationalise the assets,” the FT quoted KMG International as saying in a letter to the government.

KMG International had to delay finalising the deal with CEFC, which in December agreed a $680m fee to buy 51% of the refinery.

Robert Cutler, Senior Researcher at the Institute of European Studies at Carleton University, Montreal, said that Romania was looking to block the sale.

“Kazakhstan is about to find out what it is like to be on the receiving end of ‘resource nationalism’, which it [Kazakhstan] has successfully used against foreign investors over the last decade,” he told The Conway Bulletin.

This delay and the asset freeze has angered officials at both KMG International and Kazmunaigas, its parent company.

Senior company officials have said that they will take legal action if the refinery sale is delayed.

Romanian investigators have focused on recovering cash from an allegedly illegal privatisation of the refinery in 2003, when the late Dinu Patriciu bought Petromidia for $760m. In 2007, Patriciu sold Rompetrol, which controlled Petromidia, to Kazmunaigas for $1.6b.

In the following years, the government acquired an 18% stake in the refinery.

Now, analysts say, the government might be looking to renationalise the refinery, an important and lucrative asset for Romania.

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(News report from Issue No. 291, published on Aug. 1 2016)

People in Kyrgyz city burn posters

JULY 25 2016 (The Conway Bulletin) — People in Batken, south-western Kyrgyzstan, burned a government poster aimed at countering the growth of radical Islam which showed Kyrgyz women in traditional clothes transitioning into women wearing a full, black burqa. Kyrgyz President Almazbek Atambayev unveiled the poster this month as part of the fight against a recruitment drive in Central Asia by the radical IS group. The poster has proved controversial in Kyrgyzstan because of accusations that it is stigmatising conservative Muslims.

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(News report from Issue No. 291, published on Aug. 1 2016)

PetroKazakhstan’s production shrinks in H1

JULY 28 2016 (The Conway Bulletin) — London-traded upstream oil company KMG EP said its H1 2016 production shrank by 0.7% to 6.1m tonnes of oil. In particular, the company said that production slowed significantly at PetroKazakhstan’s operations in central Kazakhstan. KMG EP owns a 33% stake in PetroKazakhstan, while China’s CNPC owns the rest. KMG EP is a subsidiary of state-owned energy company Kazmunaigas.

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(News report from Issue No. 291, published on Aug. 1 2016)

EBRD considers stake rise in Azerbaijan

JULY 22 2016 (The Conway Bulletin) — The European Bank for Reconstruction and Development (EBRD) said it will postpone its decision to increase its stake in Holcim Azerbaijan, a cement company. The EBRD already owns a 10% stake in the company. Switzerland-based LafargeHolcim (66%), Germany’s Holcim (10%) and other private investors (14%) own the rest of the company. The EBRD said it will wait until September to take a decision.

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(News report from Issue No. 291, published on Aug. 1 2016)

Kyrgyzstan to challenge Centerra share issue

BISHKEK, JULY 26 2016 (The Conway Bulletin) — The board of Kyrgyz miner Kyrgyzaltyn will dispute Centerra Gold’s issue of new shares to buy US-based Thompson Creek because it reduces its own overall stake in the company, which owns its biggest gold mine – Kumtor.

This month, the Canadian miner, 32% owned by Kyrgyzaltyn, said that it would buy Thompson Creek for the equivalent of $1.1b, in cash and new shares.

Kyrgyzaltyn had already said it disagreed with the transaction and that it voted against it during the Centerra board meeting.

As part of the financing for the acquisition of Thompson Creek, Centerra Gold issued new shares which analysts said will reduce Kyrgyzaltyn’s 32% stake in Centerra to approximately 28.8%.

Now the local language service of US-funded Radio Free Europe/Radio Liberty has reported that senior Kyrgyz government officials are considering how to dispute the move, setting the scene for more disagreements between the Toronto-based company and Kyrgyzstan.

The two have been locked in a protracted row for years.

Kyrgyzsan wants to increase its direct ownership of the Kumtor mine, the country’s largest economic asset.

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(News report from Issue No. 291, published on Aug. 1 2016)

Kazakh miner’s production grows

JULY 22-28 1 2016 (The Conway Bulletin) — Kazakhstan miner KAZ Minerals posted a 43% growth in output in H1 2016, compared to the same period last year, to 52,600 tonnes of copper cathode. KAZ Minerals also said it cut costs for the development of its Aktogay project by 4.4% to $2.2b. Together with Bozshakol in northern Kazakhstan, the Aktogay project, located in eastern Kazakhstan, is KAZ Mineral’s main copper asset.

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(News report from Issue No. 291, published on Aug. 1 2016)