MARCH 14 2016 (The Conway Bulletin) – The International Bank of Azerbaijan, the country’s largest lender, changed its logotype, colour and slogan in an effort to boost its domestic and international image. The IBA posted poor financial results last year. Its former CEO Jahangir Hajiyev was arrested in December.
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(News report from Issue No. 272, published on March 18 2016)
MARCH 18 2016 (The Conway Bulletin) -The economic downturn continues to hit Central Asia and the South Caucasus with British Airways now cancelling its London-Baku service.
But whether BA needs to quit the route altogether is questionable. Airlines keep a diversified portfolio of route because it is near impossible to second guess which routes will be profitable in a few year’s time.
The decision took many by surprise because of the strong presence of British business in Azerbaijan, most notably BP.
As oil prices fell dramatically in the past 20 months, airline companies have rallied on cheap fuel, but have also struggled to maintain links to countries negatively affected by the crisis.
In 2012, British Airways cut its route to Yerevan, the following year it cancelled regular flights to Bishkek and Tbilisi. Last October, the company quit its London-Almaty route.
The crisis, aside from hitting government budgets and people’s wallets, has contributed to cutting off further the region from the West.
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Editorial from Issue No. 272, published on March 18 2016)
MARCH 11 2016 (The Conway Bulletin) – A World Bank tribunal rejected a $567m claim by Turkish firm Ickale Insaat against Turkmenistan that the government had deliberately derailed several construction projects, a rare victory for a Central Asian government against private companies.
The International Centre for Settlement of Investment Disputes (ICSID) said the claim was not substantiated by concrete cases of interference.
“There is no basis for the claims in the BIT [a 1992 Turkey-Turkmenistan bilateral treaty to protect investments], which does not create any cause of action under general principles of international law,” the ICSID wrote in its 175-page analysis of the case, specifying that the Turkish company will also have to pay $1.7m, or 20% of Turkmenistan’s total legal fees.
Ickale claimed that Turkmenistan had breached a dozen construction contracts signed in March-November 2007 to supply mainly consulting services on a series on projects.
The Turkmen side denied the accusations and instead said that Ickale failed to deliver on its promises to complete its works by 2009.
Ickale was supposed to deliver machinery and service construction works at two luxury hotels, four schools, one cinema in Ashgabat, and several other projects.
Ickale listed at least eight of these projects as “completed” on its website. Earlier in January, a Stockholm arbitration court had ruled against the Kazakh government in a case
brought by Estonian firm Windoor for reneging on a building deal in Astana.
Relations between Turkish firms and the Turkmen government might be worsening as the opposition newspaper Alternative News Turkmenistan alleged that another construction company Ilk Insaat had planned to sack around 1,200 workers in March-April.
When contacted by The Conway Bulletin, Ilk Insaat’s parent company declined to comment.
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(News report from Issue No. 272, published on March 18 2016)
MARCH 17 2016 (The Conway Bulletin) – A subsidiary of Canadian oil company Zenith Energy signed a production sharing agreement with Azerbaijan’s state-owned energy company SOCAR to develop three onshore oil fields. Zenith Aran Oil and SOCAR had started negotiations last year. Zenith will have an 80% share in the Muradkhanli, Jafarli and Zardab fields for the next 25 years. SOCAR will retain the remaining 20%.
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(News report from Issue No. 272, published on March 18 2016)
MARCH 17 2016 (The Conway Bulletin) – Kyrgyz PM Temir Sariyev said that 16 new hydropower stations would be built for a total of $160m, adding 188MW of power to the national grid. This is important as Kyrgyzstan is committed to boosting its power output to hit domestic demand and also to feed the CASA-1000 project which will send electricity to Pakistan via Tajikistan and Afghanistan.
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(News report from Issue No. 272, published on March 18 2016)
MARCH 17 2016 (The Conway Bulletin) – Azerbaijan exported 5.2m tonnes of oil in January and February, down from 5.5m tonnes in the same period last year, official customs data reported. Azerbaijan is reliant on oil exports to fund its budget. The drop in oil prices has hit its economy hard, forcing the government to cut budgets. The problem for Azerbaijan is that a lot of its oil fields are aging.
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(News report from Issue No. 272, published on March 18 2016)
MARCH 17 2016 (The Conway Bulletin) – Turkmen president Kurbanguly Berdymukhamedov flew to Islamabad for talks on the TAPI gas pipeline shortly after a high-level delegation from Tajikistan had met up with senior Pakistani officials, a sign of just how important Pakistan has become to Central Asian affairs.
According to reports from Islamabad, the talks between Mr Berdymukhamedov and Pakistani PM Sharif Nawaz were friendly and wide- ranging, focusing not just on the proposed TAPI gas pipeline that is supposed to run to India across Afghanistan and Pakistan.
The two leaders signed eight documents, on a number of different issues such as blocking funds to terrorism and fighting money laundering, and also praised progress on developing road links under the Central Asia Regional Economic Cooperation
And this is important. The TAPI pipeline has brought Pakistan and Turkmenistan closer together, just as the CASA-1000 power transit route plan has brought it closer towards Tajikistan, facilitating discussions on a range of bilateral issues.
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(News report from Issue No. 272, published on March 18 2016)
MARCH 14 2016 (The Conway Bulletin) – As planned after the announcement of the deal with Olisol, two executives at Guernsey-based Tethys Petroleum will step down. John Bell and Alexander Abramov will now be co-non-executive chairmen. Mr Bell and three other directors said they will not seek re-election at the next general meeting at the end of May.
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(News report from Issue No. 272, published on March 18 2016)
MARCH 17 2016 (The Conway Bulletin) – The EBRD said it extended a $39.5m credit line to Majid Al Futtaim, the regional franchisee of French retailer Carrefour, to extend its presence in Georgia. Carrefour already has three stores in Georgia and said it wants to open new ones. Carrefour is also present in Armenia, where it owns one store, Tajikistan and also in Kazakhstan.
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(News report from Issue No. 272, published on March 18 2016)
ALMATY, MARCH 11 2016 (The Conway Bulletin) – In a thinly veiled warning, an official from the Mangistau government in west Kazakhstan said that Ozenmunaigas, a subsidiary of Kazakhstan’s state-owned Kazmunaigas, could start cutting jobs to maintain profitability during the current economic downturn.
Elubai Abilov, representative of the local government, said that the company had not hired new staff since 2014 because it cannot afford to employ new workers.
He then said: “Ozenmunaigas will try to protect every job for its employees.”
Local analysts immediately read these comments as jobs being under threat, although there was no word from Ozenmunaigas itself.
In February, Maksat Ibagarov, Ozenmunaigas’ general director, had said: “We are not planning downsizing or wage cuts, but we are in a difficult situation. To be a profitable company, it is necessary to cut costs and increase oil production.”
Ozenmunaigas operates oil fields near Zhanaozen where riots killed at least 14 people in 2011. Employment is a highly sensitive matter at the company.
Last year, Kazmunaigas wrote off its Ozenmunaigas assets.
Kazmunaigas also said that during the first three quarters of last year Ozenmunaigas operated at a loss, as its average costs were around $65/barrel, while oil prices averaged $55/barrel.
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(News report from Issue No. 272, published on March 18 2016)