Tag Archives: business

Azerbaijan’s gas corridor to be funded

JULY 20 2016 (The Conway Bulletin) — Azerbaijan’s finance minister Samir Sharifov said that his country is in talks with several international financial institutions to raise funds to pay for the construction of the so-called Southern Gas Corridor, a network of pipelines that will pump gas from the Caspian Sea to Europe. Mr Sharifov told the FT that the World Bank, the European Bank for Reconstruction and Development and the Asian Development Bank are all considering supporting the project.

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(News report from Issue No. 290, published on July 22 2016)

Azerbaijan’s ministry of finance closes banks

JULY 21 2016 (The Conway Bulletin) — Azerbaijan’s ministry of finance and the Central Bank stripped four local lenders of their banking licence, a sign that the banking crisis in the country is far from resolved. Rufat Aslanli, chief of the Financial Market Supervisory Body, said that Dekabank, Kredobank, Parabank and Zaminbank, all small-sized banks, will be shut or reorganised and that their creditors will be refunded.

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(News report from Issue No. 290, published on July 22 2016)

Turkey is a vital transit route for the region

JULY 22 2016 (The Conway Bulletin) — The brief closure of the Bosphorus Strait to oil tankers for a few hours on July 15/16 during a failed coup attempt was a reminder of just how critical a stable, reliable and open Turkey is for trade flows into and out of Central Asia and the South Caucasus.

The Bosphorus Strait connects the Black Sea with the Aegean Sea and the Mediterranean Sea. If it is closed, Georgia’s Black Sea ports of Poti and Batumi are cut off – key gateways for the region for a variety of goods.

It’s an essential corridor too for oil shipments from the Chevron-lead Tengizchevroil project in western Kazakhstan which sends oil via a pipeline around the Caspian Sea to the Russian Black Sea port of Novorossiysk where it is loaded onto tankers and sent out to the rest of the world via the Bosphorus Strait.

But it’s not just the Bosphorus Strait which makes Turkey a vital transit route for Central Asia and the South Caucasus. Turkey also hosts a series of oil and gas pipelines which will link the Caspian Sea to Europe, set to become an increasingly important market.

Samuel Lussac, Caspian research manager at Wood Mackenzie, said international conventions should prevent Turkey from closing the straits but, if it did, it would have major repercussions.

“This would have a massive impact, as you have more than 1 million barrels per day of Kazakh and Russian crude shipped from Novorossiysk,” he said.

He also said the BTC oil pipeline that runs from Baku to Ceyhan on Turkey’s Mediterranean coast was an important route.

“From a transit perspective, Turkey is critical for Azerbaijan. Most of Azerbaijan’s crude is transported via BTC which goes via Turkey,” he said.

And the region’s reliance on Turkey as a transit partner is growing. New gas pipelines connecting the Caspian Sea to Europe are currently being built, underscoring the importance of Turkish stability.

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(News report from Issue No. 290, published on July 22 2016)

Kazmunaigas and KMG EP

JULY 22 2016 (The Conway Bulletin) — Kazakhstan’s oil and gas sector seems to be in a muddle with the corporate battle between Kazmunaigas, owned by the country’s sovereign wealth fund Samruk-Kazyna (90%) and the Central Bank (10%), and its London-traded upstream subsidiary, KMG EP.

The power struggle between the two seems complicated, but it’s not. Kazmunaigas’ covert intention is to increase its 57% stake in KMG EP because it wants to take more control of its profitable upstream business, especially now that oil prices are low.

KMG EP’s independent directors, on the other hand, want other minority shareholders to resist Kazmunaigas’ pressure. The alternative, according to them, will be a de-listing from the London Stock Exchange, as independence would not be guaranteed.

Kazmunaigas has always said that its primary intention is not to buy out its subsidiary, but to change the terms through which the two companies interact, to smooth bureaucracy and make the businesses more agile.

But that’s not its real goal. If it was, it would have not have raised its initial offer to minority shareholders of $7.88/GDR to $9/GDR. And it would have not have made concessions on its corporate governance plans immediately after the first negative reaction from KMG EP’s independent directors.

If Kazmunaigas gets its way and buys out most of the minority shareholders, it may force independent directors to resign and the company to de-list from London’s GDR market.

For investors looking for a transparent sector to bet on, this won’t be good news.

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(News report from Issue No. 290, published on July 22 2016)

Kyrgyzstan-operated Centerra finalises investments

JULY 20 2016 (The Conway Bulletin) — Canadian miner Centerra Gold said it finalised a financing deal with three investment banks to partially fund its takeover of Thompson Creek, a US-based miner. Centerra will receive 185m Canadian dollars ($142) from BMO Capital Markets, Credit Suisse Securities Canada and Scotiabank. Centerra Gold’s main asset is the Kumtor gold mine in Kyrgyzstan.

ENDS

(News report from Issue No. 290, published on July 22 2016)

Amsterdam court orders seizure of assets linked to Uzbek President’s daughter

JULY 20 2016 (The Conway Bulletin) — A court in Amsterdam ordered the seizure of €123m ($135m) of assets linked to Gulnara Karimova, the eldest daughter of Uzbek president Islam Karimov, as part of an ongoing global investigation into bribes paid by major telecoms firms looking to enter the Uzbek market.

Gibraltar-registered Takilant, the company linked to Ms Karimova that took bribes to award telecoms licences in Uzbekistan, had its assets frozen in Sweden in 2012/13 in a related court case but this is the first time a Western court has directly confiscated them.

The Dutch ruling targeted cash that Amsterdam-based Russian telecoms operator VimpelCom and Sweden’s Telia Company paid Takilant between 2004 and 2013.

In its decision, the court said that Takilant demonstrated “a way of doing business that is socially extremely destabilising.”

The latest ruling aggravates a corruption scandal that has sunk Uzbekistan’s already weak reputation as a place for Western businesses to operate.

It also deals another blow to Ms Karimova’s profile in Uzbekistan, where the self-styled fashion designer and diplomat was once touted as a potential president. She has been under house arrest in Tashkent for two years and her associates are in prison for various financial crimes.

With the confiscation of Takilant’s assets, the courts start to close in on reclaiming some of the millions of dollars paid to Ms Karimova. Previously, courts had only managed to fine European telecoms companies for their illegal practices.

In February, a US court ruled that VimpelCom, listed on the New York Stock Exchange, was guilty of bribing Takilant and fined it $795m. Another US prosecutor is currently trying to freeze $550m of Takilant’s assets.

Sweden’s Telia has also said at it has put aside millions of dollars to pay fines linked to bribery charges.

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(News report from Issue No. 290, published on July 22 2016)

Energy company in Azerbaijan loses revenues

JULY 15 2016 (The Conway Bulletin) — SOCAR Trading, the Geneva-based subsidiary of Azerbaijan’s state owned energy company, posted lower revenues in 2015 and warned that it expected a $9m loss from debt accumulated by Samir, the operator of Moroccan refinery Mohammedia. A Moroccan court declared Samir bankrupt for piling up billions of dollars of debt. SOCAR Trading revenues were down 42% in 2015 to $22.65b.

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(News report from Issue No. 290, published on July 22 2016)

Tajikistan and Uzbekistan downgrade flights to Pakistan

JULY 19 2016 (The Conway Bulletin) — Both state-owned Uzbekistan Airways and Tajikistan’s Somon Air have downgraded their links to Lahore, in eastern Pakistan, citing security concerns and dwindling consumer interest.

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(News report from Issue No. 290, published on July 22 2016)

Stock market: Tethys Petroleum, Olisol

JULY 22 2016 (The Conway Bulletin) — Tethys Petroleum’s share price has fallen steadily in the past four months, as the Olisol share buy-in becomes a reality. This week it closed at 1.63p/share in London on Thursday, down 6.9% on the previous week.

The Guernsey-based oil and gas company operates chiefly in Kazakhstan and Tajikistan. In May it reached a final financing agreement with Kazakhstan-based Olisol, which is poised to buy a 42% stake in the company once the deal becomes concrete.

Last week, the company announced the appointment of a new Chief Commercial Officer, Kazakhstan-born Alexander Skripka, who is also a director and shareholder of Olisol.

Mr Skripka had previously worked for state-owned Kaztransgas, the main gas distributor in the country. The link with a state-owned company is perhaps a sign of just how embedded Olisol is in the elite circles of Kazakhstan’s oil and gas sector.

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(News report from Issue No. 290, published on July 22 2016)

Kazakhstan’s mobile operator posts Q2 revenues 15% down from 2015

ALMATY, JULY 20 2016 (The Conway Bulletin) — Kcell, Kazakhstan’s largest mobile operator, said Q2 revenues were 15.3% lower than last year because of weak economic conditions and aggressive competition which have driven down prices.

Kcell’s Q2 revenues of 36.4b tenge ($107.7m) represented a slight improvement over the previous quarter, when it posted 35.6b tenge ($107), its worst quarter since an IPO in 2012. Importantly, however, Kcell said that its subscriber base is holding up through an economic downturn.

“In the second quarter we started to see some stabilisation in market prices and subscriber numbers,” the company’s CEO Arti Ots said in a statement.

Increased competition and the depreciation of the tenge currency against the US dollar over the past year have knocked revenues for mobile operators in Kazakhstan.

In April 2016, revenues for all mobile companies in Kazakhstan were down by 21% to 68b tenge ($204m) compared to the same period last year, according to government data.

Sweden’s Telia Company owns a 62% stake in Kcell. It has said that it wants to sell this stake because of reputational damage caused by a corruption probe into bribes it paid to enter the Uzbek market.

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(News report from Issue No. 290, published on July 22 2016)