APRIL 29 2016 (The Conway Bulletin) – International ratings agency Standard & Poor’s said that it doesn’t expect the Azerbaijani government to raise tariffs on electricity for fear of social unrest. S&P downgraded the state-owned electricity distributor, Azerenergy, from a rating of BB+ to BB, saying it would need a government bailout to pay back its debts.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 279, published on May 6 2016)
MAY 5 2016 (The Conway Bulletin) – Azerbaijan’s government lifted a month-long ban on foreign currency loans, official media reported. The country’s Financial Markets Supervisory Authority, which acts as a regulator, had forbidden banks from granting loans denominated in foreign currency on April 5 to try and strengthen the local manat currency.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 279, published on May 6 2016)
APRIL 29 2016 (The Conway Bulletin) – International ratings agency Moody’s said that the proportion of loans deemed non-performing in Azerbaijan had reached 20%, a sign of the country’s poor economic health.
Moody’s said that data clearly shows the growth of non-performing loans in Azerbaijan. At the end of 2014, the proportion of non-performing loans in Azerbaijan had been 4.5%. This rose to 9.1% by the end of the third quarter of 2015 and has doubled, again, in the past six months.
Non-performing loans are credits that banks have been unable to collect for over 90 days. Analysts deem this timeframe a problem because when a loan is not repaid within three months it is likely that it will not be repaid at all.
Moody’s downgraded Azerbaijan’s economy, giving it a negative outlook and predicting problems collecting outstanding loans.
“The manat devaluation triggered a flight out of local currency deposits, led to a rise in banks’ problem loans, and eroded capital buffers,” it said in a statement.
Azerbaijan’s economy is heavily dependent on oil and gas which has collapsed in value since August 2014. The Central Bank devalued the manat currency twice last year. It ended the year at half the value it had started 2015 at.
Moody’s said this has had a negative impact on both economic activity and the banking sector.
“Azerbaijan’s economic growth outlook remains weak,” Moody’s said. “Moody’s recently revised its 2016 growth forecast for Azerbaijan, expecting real GDP to shrink by 3.3%, compared to a previous forecast contraction of 0.7%, reflecting its expectation of a contraction in both the oil/gas and non-oil/gas GDP sectors.”
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 279, published on May 6 2016)
APRIL 29 2016 (The Conway Bulletin) – Grigory Marchenko, former chief of Kazakhstan’s Central Bank, bought an 8.3% stake in AGBank, a private bank in Azerbaijan. Chingiz Asadullayev, the bank’s chairman, increased his stake to 31.7%, up from 23.3%. The World Bank’s International Financial Corporation decreased its stake from 17.5% to 4.3%. Mr Marchenko left his post at Kazakhstan’s Central Bank in October 2013. Since leaving the role, Mr Marchenko has kept a low profile.
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(News report from Issue No. 279, published on May 6 2016)
APRIL 26 2016 (The Conway Bulletin) – Oil exports from Azerbaijan’s state- owned energy company SOCAR shrank by 10% in 2015 compared to 2014. In 2015, SOCAR exported 22.1m tonnes of oil, out of total country exports of 35.2m tonnes. Its share of Azerbaijan’s oil exports also fell from 70% in 2014 to 63% last year.
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(News report from Issue No. 278, published on April 29 2016)
APRIL 28 2016 (The Conway Bulletin) – Aberdeen-based oil and gas services company Wood Group said it had won a $500m contract to provide engineering, procurement and construction management services to eight BP offshore oil and gas facilities in Azerbaijan. The contract will last for five years, with the option to renew it for another four. Wood Group will service the Azeri-Chirag-Guneshli and the Shah Deniz Stage 1 projects, the largest oil and gas projects in the country.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 278, published on April 29 2016)
APRIL 28 2016 (The Conway Bulletin) – At least three soldiers and one civilian have died in gunfights over the past week between Azerbaijani and Armenian fighters in the disputed region of Nagorno-Karabakh, media reported. Earlier this month, the worst fighting for over decade killed several dozen people and tipped the two neighbours towards all-out war.
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(News report from Issue No. 278, published on April 29 2016)
APRIL 22 2016 (The Conway Bulletin) – Turkmenistan returned the body of one of the workers from an Azerbaijani oil rig who had been swept away in a storm in December. Around three dozen people were killed when the storm smashed into oil rigs in the Azerbaijani sector of the Caspian Sea in the world’s worst off-shore oil rig accident for two decades. Many of the bodies have been carried by currents across the Caspian Sea to Turkmenistan.
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(News report from Issue No. 278, published on April 29 2016)
APRIL 24 2016 (The Conway Bulletin) – The Azerbaijani government said it will loan $500m to Iran to finance the completion of the Rasht-Astara railway segment, part of a rail link from Qazvin to Astara, around the southern shore of the Caspian Sea. Mahmoud Vaezi, Iran’s minister for communications told the Trend news agency that the Qazvin-Rasht section is almost complete and Iran will use the funds to complete the link to Azerbaijan.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 278, published on April 29 2016)
APRIL 29 2016 (The Conway Bulletin) – In the early 2000s, the Baku-Tbilisi- Ceyhan (BTC) oil pipeline was hailed as a key component of the New Silk Road, designed by the West for the West. The dream might now be over.
Western oil producers wanted a pipeline that would pump Caspian oil to world markets without having to pass through Russia.
Everyone in Washington DC was excited. “Happiness is multiple pipelines” was the slogan that could be heard espoused by US diplomats and oil companies. It was even seen on bumper stickers around the US capital.
The 1b barrels/day dream pipeline was inaugurated in 2005 and relied on Azerbaijan’s largest oil fields as well as on Kazakh and Turkmen trans-Caspian shipments.
The decade-long excitement, however, seems to have hit a wall as Kazakh oil shipments have now faded away.
Experts don’t believe shipments will resume anytime soon. Tengizchevroil appears to have let its contract with BTC lapse. Kazakhstan’s Aktau port management has said it doesn’t foresee oil shipments from Tengiz resuming.
At a time of low oil prices and rising extraction prices, cutting expenditure on shipments of oil across the Caspian Sea was the obvious move for Kazakh producers.
Tengiz, and Kashagan whenever it comes online, will use the expanded Caspian Pipeline Consortium for future exports.
This choice will isolate Azerbaijan at a time when it is under the spotlight to become Europe’s new gas provider. The take-home from this story is that corporate interest, in the long run, overrides diplomatic objectives.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 278, published on April 29 2016)