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Editorial: Uzbekistan’s railway

FEB. 26 2016 (The Conway Bulletin) – At 19.2km, the Kamchik Pass railway tunnel may be the longest in Central Asia and might also be a great engineering achievement, but it is also a sign of Uzbekistan’s further isolation from world politics and markets.

Uzbekistan said it completed a World Bank and China-backed railway bypass in the Ferghana Valley that will allow its trains to run to the east of the country without having to transit through Tajikistan.

The World Bank support is important because it shows international endorsement for a mega project that Uzbekistan was eager to achieve despite the economic downturn rolling through Central Asia.

Chinese money and workers were key to the success of the project, as China has growing interest in building infrastructure in Central Asia to support its ambitious project to connect with Europe via rail and road.

Tajikistan is the main loser in this game. It will no longer receive the in- kind payment of $25m worth of gas shipments from Uzbekistan in exchange for the railway transit. And it also lost an important diplomatic chip in its endless row with Tashkent.

ENDS

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

KAZ Minerals grows production in Kazakhstan

FEB. 25 2016 (The Conway Bulletin) — KAZ Minerals said it will grow production of copper cathode by around 70% in 2016 as new deposits of Bozshakol and Aktogay come online this year. The company plans to produce up to 155,000 tonnes of copper cathode in 2016. KAZ Minerals’ revenues fell by 21% last year compared to 2014. The company received a boost when Kazakhstan decided to abandon the tenge’s peg to the US dollar, leading to a sudden depreciation of the local currency.

ENDS

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

Tax commitments drop in Armenian telecoms

FEB. 24 2016 (The Conway Bulletin) — Armenia’s three-largest telecoms operators paid 24.2% less taxes in 2015 compared to 2014, as an economic downturn worsened and increased competition hit their revenue stream. K-Telecom, owned by Russia’s MTS, is Armenia’s third-largest taxpayer. Its contribution to the budget declined by 36% to 18.6b drams ($38m). Russia’s VimpelCom-owned ArmenTel, one of the top ten taxpayers in Armenia, said its tax contributions fell by 6.2% to 15.5b drams ($31.5m).

ENDS

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

Kazakhstan’s KMG makes refining deal

FEB. 24 2016 (The Conway Bulletin) — KMG EP, Kazmunaigas’ subsidiary dedicated to exploration and production, said in a statement it obtained a price increase for oil it ships to refineries at Atyrau and Pavlodar. KMG RM, another Kazmunaigas subsidiary which manages the refineries, will now pay 74% more for shipments of oil to its refinery at Aktau and 16% more for shipments to its refinery at Pavlodar than it did in 2015.

ENDS

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

Azerbaijani economy to shrink

FEB. 23 2016 (The Conway Bulletin) – The Economist Intelligence Unit (EIU) said that it was likely Azerbaijan’s economy would contract in the first quarter of 2016. This would be the first time since the last quarter of 2011 that Azerbaijan’s economy has contracted. For an economy to be considered to be in recession, GDP needs to shrink for two consecutive quarters. The main factor in Azerbaijan’s poor economic outlook is the consistent low oil prices.

ENDS

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

Uzbekistan jails radicals

FEB. 19 2016 (The Conway Bulletin) – A court in eastern Uzbekistan sentenced five men to jail for between 5-1/2 and 12 years for various charges linked to religious extremism, media reported. Uzbek officials have said that the threat from radical extremists has intensified although Western human rights groups have said that Uzbek officials are more interested in suppressing dissent than fighting terrorism.

ENDS

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

Turkmenistan joins IAEA

FEB. 24 2016 (The Conway Bulletin) – Turkmenistan became a full member of the Vienna-based International Atomic Energy Agency (IAEA), a major step into the global spotlight for country which normally shies away from joining international clubs. Since Kurbanguly Berdymukhamedov became president in 2007, Turkmenistan has pursued a more active and inclusive foreign policy although it still stands by its neutrality doctrine.

ENDS

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

Azerbaijan’s AZAL to create low- cost carrier

FEB. 22 2016 (The Conway Bulletin) — Azerbaijan’s flagship airline AZAL will create a new low-cost company to service short-haul destinations in the South Caucasus and Central Asia. Azaljet, the new airline will start operations on March 28.

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)