Tag Archives: business

EU wants more Turkmen gas

FEB. 25 2015 (The Conway Bulletin) – In a boost to Turkmenistan’s aspirations to expand its client base for gas deliveries, the EU said it was stepping up efforts to diversify its energy suppliers away from Russia.

The Financial Times reported that a long-term energy blueprint drawn up by the EU will emphasis building relations with countries such as Turkmenistan, Azerbaijan and Algeria.
Russia currently supplies around 27% of the EU’s gas needs, an excessive over-reliance, according to EU diplomats.

Maros Sefcovic, the European Commission’s vice-president for energy affairs, said it was sensible to diversify.

“As much as we want to diversify our energy sources, I think the countries around the Caspian equally want to diversify their [export] routes,” he told the FT.

This will please Turkmen President Kurbanguly Berdymukhamedov. He has said that he wants to increase the number of clients Turkmenistan has for its gas.

China dominates Turkmenistan’s order books. Iran and other neighbours also buy gas but in smaller quantities.

It has previously floated the idea of a pipeline underneath the Caspian Sea linking Turkmenistan directly to pipelines pumping gas from Baku across the South Caucasus, Turkey and into Europe. The problem is that building the pipeline requires serious investment.

Turkmenistan holds the world’s fourth largest gas reserves in the world and its officials want to supply Europe.

“A huge resource base of hydrocarbons onshore and offshore allows Turkmenistan to increase the exports of natural gas to the world markets, to develop the new routes of its exports in the eastern and the European directions,” the Turkmen energy ministry said after the FT story.

A global drop in energy prices is pressuring Turkmenistan’s economy, forcing the Central Bank to devalue its currency. Part of the problem is Western sanctions on Russia imposed in retaliation for its support to separatists in Ukraine.
But there may be an upside for Turkmenistan, as the row speeds up Europe’s energy diversification.
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(News report from Issue No. 221, published on March 4 2015)

Uzbekistan wants to export cars to Azerbaijan

MARCH 2 2015 (The Conway Bulletin) – Uzbekistan’s deputy PM, Ulugbek Rozukulov, met with the Azerbaijani economy minister, Shahin Mustafayev to discuss increased cooperation and specifically whether Azerbaijan will be able to buy cars that had been built for the Russia market before the collapse of the rouble and the economic crisis.
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(News report from Issue No. 221, published on March 4 2015)

Kyrgyzstan gives Centerra Gold until mid-March to negotiate

FEB. 27 2015 (The Conway Bulletin) – Kyrgyz parliamentarians threatened to nationalise the Kumtor gold mine by the end of March unless its Toronto-listed owner, Centerra Gold, agreed to a new joint-venture to run it.

The ultimatum increases the stakes in the long-running battle for control of the gold mine — Kyrgyzstan’s single biggest economic asset.

“We should finally end this epic,” Reuters quoted parliamentary speaker Asilbek Zheenbekov as saying after the parliamentary vote. “Today we adopted a tough resolution.”

The row over Kumtor has dented both productivity at the gold mine based in the eastern mountains of Kyrgyzstan and the country’s GDP as well as its image as a place for foreign investors to set up businesses.

Centerra Gold has accused Kyrgyz nationalists of wiping up public anger against Kumtor through bogus environmental infringements. Kyrgyzstan has said Centerra Gold needs to run and manage Kumtor more effectively.

The Kyrgyz government wants to swap its 32.7% stake in Centerra Gold for a 50:50 joint venture with the company directly in Kumtor. Commenting on Centerra Gold’s full year results last month, its CEO, Ian Atkinson, said he was studying the proposal. This non-commitment may be the source of the frustration felt by Kyrgyz lawmakers.

Now, the issue of Kumtor’s ownership will once again move to the foreground, potentially destabilising the country and damaging for its reputation further.
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(News report from Issue No. 221, published on March 4 2015)

Rakishev takes KazKom stake

MARCH 3 2015 (The Conway Bulletin) – Kenes Rakishev, a 35-year-old Kazakh businessman who is the son-in-law of the country’s defence minister Imangali Tasmagambetov, became a major shareholder in Kazkommertsbank, one of Kazakhstan’s biggest and most prominent banks.

Last year, in a deal with Kazkommertsbank, Mr Rakishev bought debt-ridden BTA Bank from the government.

Now he has swapped his stake in BTA Bank for a 16% stake in Kazkommertsbank. The manoeuvre is part of the merger of the two banks.

It also dilutes Nurzhan Subkhanberdin’s ownership of Kazkommertsbank. Mr Subkhanberdin is based mainly in London and has previously been linked to Kazakhstan’s opposition.
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(News report from Issue No. 221, published on March 4 2015)

Max Petroleum suspends trading on AIM

MARCH 2 2015 (The Conway Bulletin) – The collapse in oil prices forced Max Petroleum, a British-Kazakh oil and gas company, to suspend trading on the London AIM stock exchange.

In a statement, Max Petroleum said it was in negotiations to restructure its debt with Sberbank and other creditors.

“If current negotiations are unsuccessful, or if other events outside the control of the Company require that the Company ceases trading while such negotiations are ongoing, then the consequences will be negative for all stakeholders in the Company,” the company statement said.

Last month Max Petroleum squarely blamed the slump in global oil prices for its problems which wiped out profit margins and deterred potential investors.

The Max Petroleum’s troubles are a microcosm of the problems facing Kazakhstan-orientated companies trying to weather an economic downturn linked to the oil price drop and the turmoil in Russia’s sanction-hit economy.

Almaty-based confectionery plant Rakhat, which South Korea’s LOTTE bought in 2013/2014 in a multi-million dollar deal, also said that it had had to lay off 500 of its 3,800 workers. It blamed unfair competition from cheaper Russian sweets.

Once feted as one of Kazakhstan’s most famous companies outside the extractive industries, Rakhat is now trying to eke its way out of the economic storm — just like most other Kazakh companies.

Max Petroleum, listed on the LSE since 2005, is a small Kazakhstan oil producer with an output of around 200,000 tonnes of oil a year.

In August 2014, AGR Energy, linked to the prominent Assaubayev family, made a deal to buy 51% of Max Petroleum for £37m ($62m), promising to embark on a significant investment to revitalise the company. The slump in oil prices, though, appears to have deterred AGR Energy from follow through with the deal and the promised investment.
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(News report from Issue No. 221, published on March 4 2015)

Kumtor gold production falls

FEB. 19 2015 (The Conway Bulletin) — In its annual report, the Toronto-based Centerra Gold said that its Kumtor mine in eastern Kyrgyzstan produced 10% less gold in 2014 than it did in 2013.

Kumtor is not only important to Centerra Gold, which also has other assets, but is also vital to the economic health of Kyrgyzstan. It is the country’s largest single asset and contributes around 10% of its total GDP.

Already reeling from the fallout from Russia’s sanction-hit economic slowdown, the news from Centerra Gold that, although expected, gold production at Kumtor had fallen will be a another big blow to Kyrgyzstan.

Centerra Gold said gold production in 2014 was around 620,000 ounces, down from 690,000 ounces.

Kumtor has been a headache over the past few years. Kyrgyzstan wants to assume more control over the gold mine, while Centerra Gold has been fighting to retain its share.

Strikes and protests caused part of the drop in production at Kumtor.

Centerra Gold CEO, Ian Atkinson said of negotiations with the Kyrgyz government over Kumtor ownership: “We are in the process of negotiating the definitive agreements to implement the restructuring as described in the Heads of Agreement signed on January 18, 2014 and are continuing discussions with the Kyrgyz Government in this regard.”

Kyrgyzstan wants to swap its 32.7% stake in Centerra Gold for a 50:50 joint venture in Kumtor directly.
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Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015)

Delay for Almaty metro

FEB. 18 2015 (The Conway Bulletin) — Kazakh president Nursultan Nazarbayev ordered work on the Almaty Metro system to stop because of a shortage of funds, media reported. The first phase of Almaty’s metro was unveiled in 2011 but high costs and low passenger numbers have combined with a drop in government funds to delay a planned extension.
ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015)

IFC and ADB issue lari-denominated bonds

FEB. 25 2015 (The Conway Bulletin) — Two major inter-governmental financial organisations — the Asian Development Bank and the International Finance Corporation (IFC) — have issued lari-denominated bonds for the first time.

The IFC, which is part of the World Bank, issued a 30m lari ($13.2m) bond with an initial yield of 6.924% and the Asian Development Bank issued a 100m lari ($44.2m) bond with a floating yield.

The idea behind the issues is to help boost the Georgian capital markets and to support small businesses.

In a statement, Pierre Van Peteghem, treasury of the Asian Development Bank said: “This bond — the largest by a foreign issuer — will provide a key market benchmark and could encourage more borrowers, both domestic and foreign, to tap the Georgian bond market.”

The ADB explained that profit from the bonds would be given to TBC Bank to lend out to small and medium sized enterprises.

And they need all the help they can get at the moment.

Like its neighbours in the South Caucasus, Georgia is struggling to deal with the fallout from the economic turbulence in Russia. Its lari currency is losing value, making lari-denominated bonds a risky investment.

Still, the drive by the IFC and the ADB to sell lari denominated bonds is a boost for the ailing currency. It also shows confidence in its future. It remains to be seen if the market also holds the same confidence in the lari currency.
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Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015)

Lithuania dairy exporters use Uzbekistan to skirt round Russia sanctions

MARCH 19 2015 (The Conway Bulletin) – Forced to look for alternative markets because of sanctions on Russia and war in Ukraine, Uzbekistan has become a major target for Lithuania’s dairy exports.

In December, dairy exports from Lithuania to Uzbekistan recorded a 19-fold increase compared to the same month in 2013, according to Russia’s Soyuzmoloko, a milk industry group.

Uzbekistan now represents over 12% of the Lithuanian dairy export market, becoming a key target for Lithuanian cheese and butter. Only Poland and Italy now import more dairy products from Lithuania.

Soyuzmoloko said there may be an alternative motive for sending products to Uzbekistan.
“Dairy products exported from Lithuania to Uzbekistan are then sent from Uzbekistan to Russia directly or via Kazakhstan, which is part of the Customs Union,” the Soyuzmoloko said in a note on its website.

The reference to the Customs Union is to an old Kremlin-led economic group. It is now called the Eurasian Economic Union.

While relations between Uzbekistan and the EU have been strained over the past few years because of rows over human rights abuses, Uzbekistan–Lithuania bilateral relations have been improving.

Last year, Lithuania’s foreign minister travelled to Tashkent for direct talks with his Uzbek counterpart.
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(News report from Issue No. 224, published on March 25 2015)

Tajik cotton exports increase

FEB. 18 2015 (The Conway Bulletin) — Tajikistan’s cotton exports, an important foreign currency earner, grew by 7% in January compared to a year earlier, local media reported. The increase bucks a trend of falling cotton exports from Tajikistan over the past few years. Extra revenue from the exports though are tempered by a global drop in cotton prices.
ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015