FEB. 4 2016 (The Conway Bulletin) — Pakistani firm Grange Power agreed a deal with Armenia over the construction of a 234 MW gas-fired power station near Vanadzor in northern Armenia.
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(News report from Issue No. 266, published on Feb. 5 2016)
JAN. 27 2016, BAKU (The Conway Bulletin) — An IMF delegation flew to Baku for meetings with Azerbaijan’s government over a potential loan to buffer it against a financial storm that now threatens to seriously damage its economy.
The FT newspaper reported that the the loan could hit $4b, although an IMF statement later dodged giving specific numbers.
“An IMF team will be in Baku during Jan. 28 – Feb. 4 for a fact- finding staff visit at the authorities’ request. The team will discuss areas for technical assistance and assess possible financing needs,” it said in a statement.
Azerbaijan’s finance minister, Samir Sharifov, though, played down reports of a loan.
He instead said that Azerbaijan was going to raise $2b by selling debt for the Southern Caucasus Gas Corridor Company, which manages various pipelines, and pipeline projects, running from the Caspian Sea to Europe.
“There is no urgent need for a loan, but we can raise loans to support the economy amid low oil prices,” Mr Sharifov told journalists in Baku of talks with the IMF.
If Azerbaijan did take an IMF loan it would be the first emergency loan given to a sovereign state during this current financial downturn. Taking an IMF loan would also dent Azerbaijan’s pride. Fuelled by high oil prices its economy has boomed over the past 15 years. The government has invested heavily in promoting its reputation as a bridge between the East and West, building grandiose towers and sponsoring major sports events.
But the government has failed to shift Azerbaijan from a petro-econ- omy to a more dynamic economy with several income streams. Instead, Azerbaijan still receives around 95% of its export revenue from oil sales.
And with oil prices at around 12- year-lows this has begun to hurt.
The government has slashed spending, inflation is soaring and jobs are melting away. The manat currency has dropped a third in value in the past month and frustrated ordinary people are beginning to speak out and protest against the government.
A Conway Bulletin correspondent in Baku said people in the streets were increasingly referring to the current economic downturn as a “crisis”.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 28 2016 (The Conway Bulletin) – Russia’s foreign minister Sergei Lavrov flew to Ashgabat to meet with Turkmen President Kurbanguly Berdymukhamedov, at a time when relations between two countries are considered to be near a post-Soviet Union low.
During his trip Mr Lavrov offered Turkmenistan help in defending its borders against potential incursion from Taliban fighters, a threat that Turkmen authorities have said has become more acute over the past year.
The Russian foreign minister quoted Mr Lavrov as saying: “If Russia’s assistance is needed with respect to these endeavours, it goes without saying that it will be in our interests to provide it. Let me reiterate that today our Turkmen friends provided us with a detailed insight into their efforts to reliably protect the border with Afghanistan.”
Local media said Mr Berdymukhamedov declined this offer.
Relations between Turkmenistan and Russia have dipped to a new low over rows about gas contracts. This year, Russia confirmed it was scrapping gas imports from Turkmenistan and buying more from Uzbekistan. Analysts said this was a slight against Turkmenistan for discussing gas routes to Europe via Azerbaijan and the S.Caucasus, a rival route to Russia’s gas supplies to Europe.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 29 2016 (The Conway Bulletin) – The visit by Sergei Lavrov to Ashgabat could be dismissed as a pre-scheduled annual trip by Russia’s foreign minister to one of the former Soviet Union’s outlying countries.
But that would be a mistake. His meeting with Turkmen leader Kurbanguly Berdymukhamedov was an important one, especially in the context of a more powerful, more determined Taliban resurgence in northern Afghanistan.
Russia-Turkmenistan relations have been worsening over the past few years, a deterioration mainly caused by rows over gas contracts and prices and also an argument over one of Russia’s mobile providers.
It’s important for Turkmenistan, and the wider Central Asia region, that Russia-Turkmenistan relations are mended.
Ashgabat may need the Kremlin’s help with organising its defences against the Taliban. If the Taliban show any real determination to break into Central Asia, the governments of Tajikistan, Uzbekistan and Turkmenistan may well need Russian backup to repel them.
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Editorial from Issue No. 265, published on Jan. 29 2016)
ALMATY, JAN. 22 2016 (The Conway Bulletin) — Guernsey-based Tethys Petroleum said it will seek alternative funding after Kazakhstan-based Olisol missed a payment on a share deal agreed last year.
In a press statement, Tethys said it had received just $5m of the $15m promised by Olisol. According to Tethys, privately-owned Olisol missed the Jan. 22 deadline to send a $2m tranche of its commitment to secure a stake in the company.
Olisol has said the delay was due to currency controls in Kazakhstan linked to the sharp depreciation of the Kazakh tenge over the few past months.
And Tethys is still hopeful that it will receive Olisol’s funding.
“Should the overdue funds under the interim facility arrive in a timely manner however, Tethys will continue to work with Olisol to close the wider transaction,” Tethys, which is involved in oil and gas projects across Georgia and Central Asia, said.
Tethys needs cash to meet its debt deadlines. Last year it missed a couple of consecutive cash calls at its project in Tajikistan, the Bokhtar exploration block. Its partners in the project, China’s CNPC and France’s Total, have called on it to drop out. The Tajik government has also said it would be interested in taking a stake in Bokhtar.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 22 2016 (The Conway Bulletin) – There is much excitement in our region over the emergence of Iran after over a decade of US-imposed sanctions.
New flight connections, new pipelines, new transmission lines and more is what a sanctions-free Iran could bring to the South Caucasus and Central Asia.
Iran has struck a deal with Air Astana to open the Almaty-Tehran air route. It has also revived talks with Turkmenistan about gas fields and pipelines around the Caspian.
Potentially, a new network to the east of the Caspian Sea could facilitate the European Union’s plans to import gas from the region. Azerbaijan may well be interested in such deals as well. In addition, Iran could become an important supplier of gas to both Armenia and Georgia.
On the flip side, Iran’s accession to the global oil market will undoubtedly drive the price of oil further down, it has huge oil reserves and production capacity, increasing the pressure on the budgets of oil-exporting economies in the region.
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Editorial from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – Armenia asked Gazprom to lower the prices of gas imports by 21% to $130 per thousand cubic metres to help it weather a fierce economic storm that has hit the region.
Media reported that Armenian gas consumers currently pay an excessive price for gas. Russia reduced the cost of gas sold to Armenia last year but the government didn’t pass that saving on to consumers. It now says that it’s time to give Armenian consumers a discount.
Last year, Armenians protested at a proposed increase in the price of electricity, giving the authorities a sharp reminder of their reputation for street-level politics.
In that instance the government backed down and avoided the price rises.
Armenia is a key Russian ally in the South Caucasus. The Russian military maintains a major base in Armenia.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 20 2016 (The Conway Bulletin) – Georgian Energy Minister Kakha Kaladze said that he wanted to increase the amount of gas imported from Russia to 20% of Georgia’s total consumption, up from 11%, as he prepared to meet Gazprom executives for more talks. Plans to boost gas imports from Russia have irritated many Georgians. Georgia and Russia fought a war in 2008.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – Russian foreign minister Sergei Lavrov has scheduled a visit Ashgabat to open a new embassy on Jan. 27/28, media reported, just as relations between the two countries appear to bottom out over a row about gas supplies. Earlier this year Russian gas monopoly confirmed that it would stop buying gas from Turkmenistan and instead buy from neighbouring Uzbekistan.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 18 2016 (The Conway Bulletin) – Gazprom Kyrgyzstan, a fully-owned subsidiary of Russia’s Gazprom, paid off a $41.6m debt that the Kyrgyz company has owed to its Kazakh counterparts since 2004. Gazprom bought Kyrgyzgas for $1 in 2014, promising to pay off its debts. This deal appears to underline Gazprom’s drive to make good on this promise.
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(News report from Issue No. 264, published on Jan. 22 2016)