Tag Archives: Azerbaijan

BP’s oil production in Azerbaijan falls

FEB. 21 2017 (The Conway Bulletin) — Oil output from BP’s projects in Azerbaijan, the mainstay of the country’s economy, fell to 630,000 barrels per day in 2016 from 634,000 in 2015, it said. This is bad news for Azerbaijan which is reliant on BP’s output to generate most of its income. Pres. Ilham Aliyev has personally extolled BP to boost production at its Azeri-Chirag- Guneshli fields.

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(News report from Issue No. 318, published on Feb.24 2017)

Azercell dodges handing out data for 2016 performance

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FEB. 22 2017 (The Conway Bulletin) — Azercell, the Azerbaijan-based subsidiary of Sweden’s Telia, appeared to dodge releasing meaningful numbers for its performance at its full year 2016 press event, instead issuing a statement that discussed its contribution to the Azerbaijani economy and its spending on social projects.

Since 2011, Azercell has published online its results but this year was different. There was no results page with a breakdown of how the company had performed. Instead, an unashamedly PR-esque statement extolled the company’s virtues.

Requests to the Azercell press department for the full year results went unanswered, adding to the impression that Azercell was trying to dodge releasing the data. Azerbaijan’s economy is under pressure at the moment and shrunk by an estimated 3.8% in 2016. A drop in oil prices and a recession in Russia has hurt the oil-backed economy badly and forced the currency to devalue by 50%.

There was a hint in Telia’s own full year results in January, that Azercell had had a tough 2016.

Telia said that net sales in reported currency from its Eurasian unit had fallen by 25% because Ncell in Nepal had been sold and because of “lower net sales in Azercell in Azerbaijan due to negative currency development.”

It then said earnings had dropped in 2016 partly because of “margin erosion in Azercell in Azerbaijan”.

Telia has been looking to sell its units in the Central Asia and South Caucasus region because of reputational damage inflicted by its Uzbek unit over a corruption scandal.

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(News report from Issue No. 318, published on Feb.24 2017)

Azerbaijani authorities arrest two for spying

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FEB. 24 2017 (The Conway Bulletin) — Azerbaijan’s security service said that they had arrested two nationals Elsan Amirli and Elcin Babayev for spying. It said that the two men had been collecting information on the country’s security services on behalf of another country. It did not name the other country. The two men have been charged with treason.

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(News report from Issue No. 318, published on Feb.24 2017)

Azerbaijani section of Southern corridor to work by 2020

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FEB. 19 2017 (The Conway Bulletin) — The so-called Southern Gas Corridor running from the Azerbaijani section of the Caspian Sea to Europe will be operational by 2020, Azerbaijani president Ilham Aliyev said at an international security conference in Munich. He said that the South Caucasus Pipeline was 80% complete, the TAP pipeline line was 35% complete and the extension on the Shah Deniz gas field was 90% complete.

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(News report from Issue No. 318, published on Feb.24 2017)

Azerbaijan to set up arbitration court with Iran

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FEB. 18 2017 (The Conway Bulletin) — Looking to facilitate Iran-Azerbaijan trade, Iranian justice minister, Mostafa Pourmohammadi told journalists in Baku that he wanted to set up a joint arbitration court. Relations between the two neighbours has been improving steadily over the past few years and both sides have said that they want businesses to follow their lead and bilateral trade to increase.

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(News report from Issue No. 318, published on Feb.24 2017)

Azerbaijani president sacks long-time minister Mammadov from transport ministry

FEB. 13 2017 (The Conway Bulletin) — Azerbaijani president Ilham Aliyev sacked his powerful and long-serving minister of transport, Ziya Mammadov, continuing a purge of his top officials that stretches back to 2015.

In a presidential decree, Mr Aliyev announced that he was disbanding the current transport ministry from where Mr Mammadov has built up a web of political patronage and abusiness empire worth millions of dollars. In its place Mr Aliyev created a new transport and telecoms ministry headed by Ramin Guluzade, 40, head of the communications and IT ministry since January 2016.

The abrupt dismissal, given without an explanation, marks a heavy fall from grace for Mr Mammadov, considered one of the most powerful government ministers and a confident of Mr Aliyev.

His son,Anur Mammadov, ran most of his businesses and had been lined up to partner with Donald Trump in a hotel venture in Baku until December whenMr Trump pulled out of the deal.

Neither Mr Aliyev nor Mr Mammadov have commented on the dismissal and the merger of the transport and telecoms ministries.

In 2015, Mr Aliyev also sacked two other long-time ministers,

Eldar Mahmudov and Ali Abbasov. They were never charged with corruption but days after they were dismissed from the security and telecoms ministries, police arrested several high-ranking officials for bribe-taking.

Mr Mammadov and his son have always cut controversial figures. As well as being linked to US President Trump, rumours of money laundering, corruption and links to the Iranian military, contacts still not allowed for US companies under sanctions, have dogged them.

Journalists based in Baku have said that the Mammadovs’ business empire is based on contracts awarded to their construction companies by the transport ministry.

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(News report from Issue No. 317, published on Feb.17 2017)

Spar opens new stores in Azerbaijan and Georgia

FEB. 15/16 2017 (The Conway Bulletin) — The Dutch convenience store chain Spar opened up more stores in Azerbaijan and Georgia, part of its drive to increase its global coverage. Spar said that it had opened three more stores in Baku at the end of last year, following the opening of its first store in the Azerbaijani capital in December 2015. In Georgia, Spar also opened another store, bringing to 21 its total for Georgia. Spar has expanded outside its central Europe heartland by both owning its stores directly and granting an independent retailer the rights to use its brand.

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(News report from Issue No. 317, published on Feb.17 2017)

US and Russian military chiefs meet in Azerbaijan

FEB. 15 2017 (The Conway Bulletin) — Baku scored a diplomatic coup by hosting the first meeting of the most senior military officers in the United States and Russia since 2014.

The meeting between General Joseph Dunford, US chairman of the Joint Chief of Staff, and General Valery Gerasimov, head of the Russian general staff, was scored through with extra importance as it was also the first high-level meeting between the two sides since Donald Trump became US President in January.

A statement from the Pentagon underlined its importance.

“The current sate of US-Russian military relations and the importance of consistent and clear military-to- military communication to prevent miscalculation and potential crisis (was on the agenda),” the Pentagon statement said.

Relations between the two sides have been strained over Russian military action in both Ukraine, where it is supporting pro-Moscow rebels, and in Syria, where it is supporting the forces of Syrian president Bashir Assad.

Before meeting Gen. Gerasimov, Gen. Dunford met with Azerbaijan’s President Ilham Aliyev and the Azerbaijani defence minister Zakir Hasanov.

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(News report from Issue No. 317, published on Feb.17 2017)

Azerbaijan budget airline to fly to Moscow

FEB. 16 2017 (The Conway Bulletin) — AZALJet the budget airline belonging to Azerbaijan Airlines, known as AZAL, will start flying to Moscow’s Vnukovo airport from Ganja and Gabala, two Azerbaijani regional towns, media reported, a move that may be aimed at migrant workers as much as businessmen or tourists. AZALjet was founded in March 2016 and links Baku mainly to capitals of former Soviet states but also to many of Turkey’s biggest cities.

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(News report from Issue No. 317, published on Feb.17 2017)

Comment: Central Banks face mess of their own making, says Kilner

FEB. 17 2017 (The Conway Bulletin) — First came the oil price collapse, then remittance flows started stagnating and (some) currencies (think of the tenge and the Azerbaijani manat) halved. Now the debt mountain, or perhaps debt tsunami is a better description, looms large, threatening to drown the countries of Central Asia and the South Caucasus.

Kazakhstan is the latest to propose a major bailout of its banking sector. Finance minister Bakhyt Sultanov said on Feb. 13 that the government would potentially use $6.3b to prop up banks listing under the weight of bad loans. The Tajik government is in talks with the IMF to borrow cash to help prop up its banking sector and in Azerbaijan the government has been, as quietly as possible, buying up chunks of the biggest bank. It now owns more than 76% of the International Bank of Azerbaijan, allowing it to smooth out its debt crisis without attracting too much attention.

Ratings agencies and analysts have been warning of this denouement.

As long ago as December 2015, Standard & Poorsratings agency said: “Medium-term prospects for Kazakhstan’s banking system have deteriorated in 2015 due to lower oil prices, the economic slowdown (especially in non-extractive sectors) and the weaker tenge.”

And that prediction has been borne out.

The frustration is that we have been here before. In the Global Financial Crisis of 2008/9 bad debt built up in banks in Kazakhstan forcing the government to step in. It bought out BTA Bank, at the time one of the country’s biggest lenders, and a handful of smaller banks. It was expensive but staved off disaster and the Kazakh government pledged not to find itself in a similar position again.

The government finally offloaded BTA bank to pro-government businessmen in 2014/15 and proposed to impose rules and regulations that would require its banks to bulk up their capital and refrain from handing out loans, mainly mortgages, to people unworthy of them.

Clearly, the Kazakh Central Bank and other regulators across the region, have failed. Certainly they have not been helped by the sharp currency devaluation that made US dollar-denominated mortgages unserviceable.

Better macro-economic policies, tighter rules on lending and a more clear-headed approach to dealing with problems would surely have put the Central Banks in better positions than they now find themselves. Governments in the region are once again having to buy themselves out of trouble.

By James Kilner, Editor, The Conway Bulletin.

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(News report from Issue No. 317, published on Feb.17 2017)