Tag Archives: business

Kazakhstan’s Kashagan provides oil update

NOV. 14 2016 (The Conway Bulletin) — Kazakhstan’s giant Kashagan oil field produced 1.5m barrels of oil in its first month of operations, official media reported. In daily terms, Kashagan produced an average of 52,600 barrels, far below the minimum threshold of 75,000 barrels/day that the consortium said it needs to produce to keep extraction commercially viable. The Kazakh government had previously said it expects Kashagan to reach an average of 90,000 barrels/day before the end of the year.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Kazakhstan plans a freight company

NOV. 11 2016 (The Conway Bulletin) — Kazakhstan’s national airline Air Astana and its state-owned railway company Temir Zholy will combine next year to create a new air freight company, media reported. It quoted a Temir Zholy official as saying that Kazakhstan wanted to exploit its position between Asia and Europe to boost its economy by acting as a logistics and cargo hub. Uzbekistan has already developed plans to set itself up as a similar transport hub.

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(News report from Issue No. 305, published on Nov. 18 2016)

Comment: Kazakh electricity plans

NOV. 18 2016 (The Conway Bulletin) — The Kazakh government has cancelled plans to build either a thermal or nuclear power station despite saying for the past decade that an upgrade to its power generating system was vital.

At a press briefing earlier this month in Astana, Kazakh Energy Minister Kanat Bozumbayev said that, despite predictions of the opposite, Kazakhstan actually now has a surplus of power.

“We see no deficit within the next seven years, so we see no [need to build] new facilities such as a nuclear power plant within the next seven years,” he said. This is an important statement for two reasons. Firstly Bozumbayev is doing future generations of Kazakhs a disservice. Secondly he is not being honest with this current generation of Kazakhs.

Both the short-termism and the dishonesty are worrying. Kazakhstan needs more power. Just ask people living in Almaty who have to deal with an increasing number of brownouts. As the country has modernised and grown wealthier, electricity consumption has soared. World Bank data showed that in 2013, Kazakhstan’s per capita electricity consumption was 4,892 kilowatt hours, up from a post-Soviet low in 1999 of 2,838 kilowatt hours.

At the same time, Kazakhstan’s population has grown from just under 15m people in 1999 to just over 17m people in 2015.

Kazakhstan prevaricated for years with various suitors over building a new nuclear power station, its Soviet-era nuclear power station had been decommissioned in 2001, but earlier this year said it had scrapped the idea.

In September, Kazakhstan and Korea’s Samsung also finally admitted that its mothballed $2.5b plan to build a coal-fired power station on the shores of Lake Balkhash to feed electricity to Almaty had also been scrapped.

And here’s the hard truth, the real reason that Kazakh officials said they don’t need a new power station is that Kazakhstan’s finances are currently not up to funding the construction of one.

Last year, Samsung Engineering CEO Park Jung-heum said he had mothballed the Balkhash thermal power project “because of an issue with the Kazakhstan government over the guaranteed purchase of the power to be produced from the project.”

Power generation plans in Kazakhstan have become the latest victim of the economic downturn. The government should admit this and lay plans to boost production as soon as they can afford to.

ENDS

(News report from Issue No. 305, published on Nov. 18 2016)

Sanofi enters the fray in Uzbekistan

NOV. 11 2016 (The Conway Bulletin) — French pharmaceuticals company Sanofi entered a partnership with Uzbek state-owned Uzfarmsanoat to produce medicines in the country, official media reported. The Uzbek ministries of health and of international trade said that the deal will focus on the production and circulation of flu vaccines.

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(News report from Issue No. 305, published on Nov. 18 2016)

Russneft adds assets in Azerbaijan

NOV. 15 2016 (The Conway Bulletin) — Ahead of a planned IPO in Moscow, Russian energy company Russneft said it will add oil and gas assets in Azerbaijan to its balance sheet in 2017. The 15b cubic metres of gas and 11.2m tonnes of oil holdings in Azerbaijan were owned by Global Energy Azerbaijan. Russian billionaire Mikhail Gutseriev owns a majority share in Russneft and owned Global Energy Azerbaijan before it was bought by Russneft in 2014. Oil trading giant Glencore owns a minority stake in Russneft.

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(News report from Issue No. 305, published on Nov. 18 2016)

Qazkom and Halyk Bank eye merger to create Kazakh bank giant

ALMATY, NOV. 15 2016, (The Conway Bulletin) — Kazakhstan’s largest lenders, Halyk Bank and Qazkom, are in talks to merge and create a super- sized bank with strong links to the Kazakh elite that would dwarf its rivals, according to sources quoted by Reuters.

Reuters quoted two anonymous sources, who both confirmed that talks were under way and that the merger could be agreed after Halyk redeems a $638m Eurobond in May 2017.

Importantly, one of the sources said that the idea behind the merger traces all the way up to the presidential family.

President Nursultan Nazarbayev’s daughter Dinara and her husband Timur Kulibayev coown Halyk Bank. Kenes Rakishev, son-in-law of Mr Nazarbayev’s close ally Imangali Tasmagambetov, owns Qazkom. Mr Tasmagambetov is minister of defence.

Qazkom which rebranded last month from Kazkommertsbank, gave a guarded denial that a merger was about to happen. Halyk Bank did not comment.

“Responding to recent rumours, I can say that Qazkom has neither made nor received offers regarding a merger with Halyk Bank,” Qazkom’s press officer, Sergei Chikin, told media

A merger would form a banking superpower in Kazakhstan, four times larger than its biggest competitor, Tsesnabank, owned by Adilbek Dzhaksybekov, head of the Presidential Administration. Analysts, though, are skeptical at the prospects of a merger, which would create a bank with a 40% of the loans market.

“Even if the talks are proved true, the Central Bank is unlikely to allow a merger that would monopolise the market,” Rasul Rysmambetov, director of the Public Fund Financial Freedom, told the Inform-Kazakhstan news agency.

In the past two years, both Qazkom and Halyk have cleaned up their toxic assets, which built up during the Global Financial Crisis of 2008/9. Qazkom had also bought Kazakhstan’s once-largest lender BTA Bank, now riddled with non- performing loans. It also changed ownership, with Mr Rakishev sidelining founder Nurzhan Subkhanberdin.

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(News report from Issue No. 305, published on Nov. 18 2016)

Georgia begins East-West pipeline construction

NOV. 16 2016 (The Conway Bulletin) — Georgian Oil and Gas Corporation said it started construction on a section of the East-West gas pipeline, from Tsiteli Khidi on the border with Azerbaijan to Gardabani. The company said it will invest 4.5m lari ($1.4m) to complete the 20km section. Georgia ordered a general overhaul of the 450km Soviet-era pipeline from the border with Azerbaijan to the Black Sea port of Poti. State-owned Partnership Fund is the only shareholder.

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(News report from Issue No. 305, published on Nov. 18 2016)

Georgian Mining raises $3.2m to develop Kvemo Bolnisi

TBILISI, NOV. 16 2016, (The Conway Bulletin) — London-listed Georgian Mining Corporation said it raised £2.6m ($3.2m) in a new share offering designed to finance the development of its Kvemo Bolnisi copper and gold mine in the south of Georgia.

Last month, Georgian Mining changed its name from Noricum Gold to reflect the geographic focus of its operations.

After the restructuring and consolidation of ordinary shares, the fresh share issue represents 40% of the total issued shares and will dilute ownership in the company.

Before the placing, businessmen Michael Johnson (6.1%), Martyn Churchouse (5.4%) and Fahad Al- Tamimi (4.9%) were the three largest shareholders.

The company said the new cash will fund development of the Kvemo Bolnisi mine, in which it owns a 50% stake.

“This raise is a significant endorsement of our approach to commence production at low cost and for a minimum capex requirement,” director Greg Kuenzel said in a statement.

Georgia’s Caucasian Mining Group, owned by Russian entrepreneur Dmitri Troitsky, is Georgian Mining’s partner at Kvemo Bolnisi.

Georgian Mining bought its 50% share in Kvemo Bolnisi in July 2015 from GMC Investment for £2.6m ($3.2m). The company started drilling in June, in line with its forecasts. Reserves at the Bolnisi project include 980,000 tonnes of copper, 6.6m ounces of gold and 22m ounces of silver.

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(News report from Issue No. 305, published on Nov. 18 2016)

Western banks agree $500m loan for Lukoil subsidiary working in Uzbekistan

NOV. 15 2016 (The Conway Bulletin) — An Uzbek subsidiary of Russian energy company Lukoil received a loan of $500m from various European and Japanese financial institutions to develop the Gissar gas and condensate field in Uzbekistan.

A consortium of banks — Italy’s Unicredit and Intesa Sanpaolo, Russia’s VTB, Dutch lender ING, Japan’s Mizuho Bank, France’s Natixis and Austria’s Raiffeisenbank — has agreed to give the loan to Soyuzneftegaz Vostok, Lukoil’s subsidiary in Uzbekistan.

This is important because, by providing Soyuzneftegaz Vostok with a loan, Western banks are indirectly investing in Uzbekistan and, also, lending Lukoil funds. Lukoil is under US sanctions but not European sanctions.

The five-year loan will help Lukoil expand the Gissar project, which has produced around 1.3b cubic metres/year since 2011. The company plans to grow production to 4.8b cubic metres/year by 2017 and build a gas treatment complex near the field. Earlier this year, Lukoil said it was looking to obtain a loan from South Korean lenders and that it needed a $1b cash injection to com- plete the upgrade.

Sanctions were imposed on Russian companies after Russia’s annexation of the Crimea in 2014.

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(News report from Issue No. 305, published on Nov. 18 2016)

Kazakh government holding seeks Japan loan

NOV. 9 2016 (The Conway Bulletin) — Baiterek, a Kazakh government holding, said it secured a $300m loan from Japan’s SMBC, part of the Sumitomo group. The agreement, signed during President Nursultan Nazarbayev’s visit to Japan, will support the supply of high-tech equipment. The Kazakhstan Development Bank, a subsidiary of Baiterek, will receive the funds and finance joint projects with Japanese companies.

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(News report from Issue No. 304, published on Nov. 11 2016)