FEB. 2 2016 (The Conway Bulletin) — Malaysian oil company Sumatec said that it hadn’t yet started operations at its Buzachi field in the Mangistau region, western Kazakhstan, that it bought last year for $290m from Borneo Energy. It has delayed a $105m payment to different creditors until Buzachi starts production.
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(News report from Issue No. 266, published on Feb. 5 2016)
ALMATY, JAN. 29 2016 (The Conway Bulletin) — Revenues at Kazakh telecoms company Kcell fell for the first time in six years in 2015, evidence that worsening financial conditions are hitting all sectors of Kazakhstan’s economy.
Last year Kcell revenues dropped 10% to 168b tenge ($448m), the company said at its full year results. In US dollar terms, however, the comparison looks worse. In 2014, revenues stood at 187.6b tenge or $1.01b at the time. This means that revenues dropped 56% in US dollar terms. The Kazakh tenge lost half its value against the US dollar in 2015.
The management at Kcell blamed the downturn on low oil prices, the sharp depreciation of the tenge and a tough market.
“We experienced a tough operating environment in 2015, with the devaluation of the tenge, oil price weakness and a Kazakh telecoms market characterised by intensive competition,” Arti Ots, Kcell’s CEO said in a statement.
Tellingly, though, Kcell’s subscriber numbers fell by 7.5% and the average spend per consumer dropped by 8.7% in 2015 highlighting competition and creeping conservatism by consumers. Overall operating profit was down by 30%.
There is fierce competition in Kazakhstan’s saturated mobile market, an issue that Askar Akhmedov, a telecoms analyst at Halyk Finance, raised.
“The price war between Kazakhstan’s mobile operators appears to be intensifying,” he said in a note clients. Overall, he said that these results were worse than expected.
Swedish telecoms company TeliaSonera owns 61.9% in Kcell and in its sister company Activ.
Last year, TeliaSonera said it would sell stakes in companies across the South Caucasus and Central Asia after its Uzbek subsidiary became embroiled in a corruption scandal centred on payments made in 2008 to win a mobile phone licence.
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(News report from Issue No. 266, published on Feb. 5 2016)
FEB. 5 2016 (The Conway Bulletin) — Malaysian oil company Cliq Energy said it still hadn’t obtained permission to buy an oil field in Kazakhstan from the Malaysian authorities. The Securities Commission of Malaysia previously turned down Cliq’s request to go ahead with the deal. Last year, Cliq paid $110m for two blocks at the Karazhanbas North oil field. It needs to finalise the deal by a April 9 deadline.
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(News report from Issue No. 266, published on Feb. 5 2016)
JAN. 29 2016 (The Conway Bulletin) – Kcell, Kazakhstan’s biggest mobile operator, posted revenues down 10% because of a slowdown in consumer spending linked to the economic downturn.
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(News report from Issue No. 266, published on Feb. 5 2016)
FEB. 2 2016 (The Conway Bulletin) — Kazakhstan’s flagship airline, Air Astana signed several codeshare agreements with international carriers to boost its image and offer new products to customers. From March 11, Air France/KLM customers will be able to book an Air Astana-operated flight from Astana to Paris. In a separate deal, Hong Kong Airlines also signed a codeshare agreement with Air Astana on its Hong Kong – Almaty flights. Air Astana now holds eight international codeshare agreements.
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(News report from Issue No. 266, published on Feb. 5 2016)
JAN. 31 2016 (The Conway Bulletin) — The EBRD sent a $5.9m loan to Sagat Energy for the completion of a combined gas and heat electric power plant in Atyrau, western Kazakhstan. The plant will have a capacity of 11 MW.
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(News report from Issue No. 266, published on Feb. 5 2016)
JAN. 22 2016 (The Conway Bulletin) — French oil service company Technip Maritime Overseas quit Azerbaijan. It didn’t give an explanation about why it had quit Azerbaijan but the collapse in global oil prices could well be the root cause. The company, which has operated in Azerbaijan since 1993, maintains regional headquarters in Turkmenistan and Kazakhstan. Last year it won a consulting contract with TAP, a gas pipeline that will bring gas from Azerbaijan to Italy.
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(News report from Issue No. 265, published on Jan. 29 2016)
ALMATY, JAN. 26 2016 (The Conway Bulletin) — South Korean industrial group LG Chem dropped its plan to build a $4.2b petrochemical complex in Kazakhstan, a major dent to the county’s economic outlook and perhaps the biggest project cancellation during this sustained period of low oil prices.
Under the project plans, drawn up in 2011, LG would have built two plants, to produce ethylene and polyethylene, near the town of Atyrau on the Caspian Sea shore.
“The Kazakhstan project lost its lustre because of a steep increase in facility investment amid growing uncertainty. On a business front, LG’s top management reached a consensus that it wasn’t promising,” the company said in a statement.
LG didn’t directly reference low oil prices, now at around a third of their level of 18 months ago, but the collapse would have made the plant far less profitable.
LG’s partners in Kazakhstan were state-owned United Chemical Company and privately-run SAT & Co, each holding a 25% stake in the Atyrau petrochemical project. Kenes Rakishev, son-in-law of defence minister Imangali Tasmagambetov, owns 75.6% of SAT.
LG Group controls various projects across Kazakhstan, Uzbekistan and Turkmenistan.
Low oil prices and recession in Russia have hit Central Asia hard, triggering project cancellations.
This also included an exploration project run by Petrovietnam, Vietnam’s state-owned energy company, which had been looking for hydrocarbon reserves in the Ustyurt region of Uzbekistan.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 26 2016 (The Conway Bulletin) – Azerbaijan has made it easier for citizens of Qatar, Oman, Saudi Arabia, Bahrain, Kuwait, Japan, China, South Korea, Malaysia, and Singapore to obtain visas by making them available on arrival at airports. Azerbaijan’s foreign ministry said the country wants to promote tourist visits and business relations. In 2010, Azerbaijan scrapped visas- on-arrival for most Western countries.
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(News report from Issue No. 265, published on Jan. 29 2016)
BISHKEK, JAN. 26 2016 (The Conway Bulletin) — Businesses, company owners and lobby groups in Kyrgyzstan have criticised the Kyrgyz- Russian Investment Fund, launched with great fanfare in 2014 ahead of Kyrgyzstan’s entry into the Kremlin- led Eurasian Economic Union, as ineffective.
The criticism will sting as it comes after Russia withdrew support for a $2b hydropower project in Kyrgyzstan. It also underlines the Kremlin’s waning influence in Central Asia.
“The Kyrgyz-Russian Investment Fund does not have enough resources to keep the economy stable, as it cannot substitute a drop in remittances which used to come from Kyrgyz labour migrants in Russia and
revenues from re-exporting Chinese goods through Kyrgyzstan,” Uluk Kydyrbayev, head of the National Alliance of Business Associations lobby group, told The Bulletin.
An anti-crisis plan presented by the government on Jan. 26, which placed the Fund at its core, triggered an outpouring of frustration by businesses.
The Kyrgyz-Russian Investment Fund measures around $500m and was supposed to act as source of cheap credit for Kygyz businesses. At least some of this cash, though, has been used to bail-out mortgage holders who have seen their debts spiral with the devaluation of the som against the US dollar.
Like the rest of the region Kyrgyzstan is trying to navigate its way through a worsening economic crisis. One of the consequences is a fall in remittances from Russia.
Tilek Toktogaziyev, head of an organic food company, said that the Kyrgyz-Russian Fund had been a failure and had favoured big business over small business.
“The credits are only given to big companies who have break-even activities in past three years and have been present in the market for a long time,” he said.
He said the lowest credit the Fund gives is $3m. To win this loan, the company owner also has to make a contribution of 20%.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 265, published on Jan. 29 2016)