Tag Archives: gas

Karachaganak partners agree to pay Kazakhstan $1.1b

ALMATY/OCT. 1 (The Conway Bulletin) — The partners developing the Karachagank oil and gas site, a cornerstone of Kazakhstan’s energy production, agreed to pay the Kazakh government $1.1b, settling a long-running dispute over profit sharing.

Kazakhstan will also receive an estimated $415m in extra revenue by 2037, based on the price of oil at $80/barrel, in the new profit sharing deal.

For the Karachaganak partners — Shell, ENI, Lukoil, Chevron and Kazmunaigas — and their shareholders, the deal marks the end of a dispute that could have severely undermined the project from 2015 when Kazakh officials first accused the consortium of an unfair profit sharing deal. None of the partners have yet commented on the deal.

The final $1.1b agreed fee is less than the initial $1.6b that Kazakhstan had pushed, although the additional earnings will probably take it close to that amount.

There is also a $1b long-term loan that the consortium has agreed to give to Kazakhstan to develop its regions.

The partners have also committed to spending $5b on upgrading the site to ensure that production continues.

Karachaganak is one of the most important oil and gas projects in Kazakhstan producing nearly 50% of its gas and 18% of its oil production.
This year, Kazakhstan has increased oil production by 5.3% to 60m tonnes by the end of August, the Kazakh energy ministry said earlier this month.

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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018

Putin visits Azerbaijan

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SEPT. 27 (The Conway Bulletin) – On a flying visit to Baku on the eve of the CIS leaders’ summit in Dushanbe, Russian President Vladimir Putin praised relations with Azerbaijan and talked up their joint investments. He said that Russian companies had created 700 joint ventures in Azerbaijan and had invested $1.5b. Mr Putin has appeared to step up his attention to Azerbaijan over the past few months, just as Azerbaijan readies to start sending gas supplies to Europe through a new pipeline network. Azerbaijani President Ilham Aliyev is also a regular visitor to Russia.
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>>This story was published in issue 387 of The Conway Bulletin on Oct. 1 2018

China pays for Tajik section of pipeline

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DUSHANBE, JAN. 31 (The Conway Bulletin) -China is funding construction work on the Tajik section of a pipeline that should culminate in more gas being imported from Turkmenistan, media reported.

Tajik news agency Asia Plus reported that work on the fourth Central Asia-China gas pipeline had stopped until China came forward with cash for the project. It quoted Tajik deputy energy minister Jamshed Shoimzoda as saying that China was now making payments.

“Certain works are currently being carried out in the Roudaki district,” he was quoted as saying.
The pipeline is important politically as it links Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. It is also important economically as it will bring in transit fees and create jobs.

Building work on the project had begun in 2014 but appeared to stall in 2015 with Uzbek officials saying that work had been suspended.

Tajikistan is hosting a 400km section of the pipeline.

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>>This story was first published in issue 360 of The Conway Bulletin

Iran-Turkmenistan gas argument worsens

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JAN. 29 (The Conway Bulletin) – Iran threatened to take Turkmenistan to an international tribunal over a row about gas supplies, worsening a year-long argument between the two neighbours.

Iranian officials said that not only did they contest the value of the outstanding bill that Turkmenistan says Iran still hasn’t paid, but also that the gas Iran had received was of sub-standard quality.

“We are planning to take dispute with Turkmenistan’s state-owned gas company, Turkmengaz, over the quality of the delivered gas to an International Court of Arbitration,” Iranian news agencies quoted Bijan Namdar Zanganeh, the Iranian petroleum minister, as saying.

Turkmenistan stopped sending gas to Iran in January 2017, claiming it had not been paid for deliveries several years earlier.

Some analysts have said that Turkmenistan may be trying to squeeze more money out of Iran for gas supplies to the north of the country because its economy has been floundering. In December, Turkmenistan said that it had started preliminary arbitration proceedings against Iran for what it said was the outstanding amount owed. It did not name the arbitration court that it was targeting or just how far it had gotten with the process.

Iran has been importing gas from Turkmenistan, whose main client is China, since 1997.

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>>This story was first published in issue 360 of The Conway Bulletin

Turkmen gas supplies to China drop

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DEC. 26 (The Conway Bulletin) — Gas supplies to China from Turkmenistan fell by 7% in November although compared to the same period in 2016 volumes have still increased, Reuters reported quoting Chinese customs data.

There has been no official explanation from either Turkmenistan or China on the gas supply drop but the slump will pile extra pressure onto the already-faltering Turkmen economy.

Turkmenistan’s economy is dependent on its gas sales to China. It is China’s largest supplier, providing it with 40% of its imports. Chinese data showed that imports from Turkmenistan were 1.592m tonnes, down from 1.71m tonnes in October. This is still 11% higher than a year earlier.

Turkmenistan’s economy is already under pressure from the collapse in energy prices since 2014.

Turkmen Pres. Kurbanguly Berdymukhamedov has sacked ministers and other officials as he looks to shift blame. The government has also cut subsidies for utilities and reports have said that the Black Market price of the US dollar has soared against the Turkmen manat.

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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

TAP is on target to deliver Azerbaijani gas to Europe

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DEC. 23 (The Conway Bulletin) — The Trans Adriatic Pipeline (TAP) is on target to deliver the first gas from Azerbaijan by 2020 despite protests from locals in Italy who have said that the $5.3b project will destroy ancient landscapes, Walter Peeraer, the TAP chairman, told Reuters. TAP is the final leg of a pipeline system dubbed the Southern Gas Corridor that central Europe is banking on to deliver gas from the Caspian Sea, reducing its reliance on Russia. The main gas supplier for the $40b Southern Gas Corridor is Azerbaijan’s BP-run Shah Deniz II.

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Georgia agrees gas imports from Azerbaijan

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JAN 3 (The Conway Bulletin) — Georgia will buy almost 100% of its gas supplies from Azerbaijan this year, officials told local media, completing a total switch from Russia-supplied gas. The announcement is, effectively, a continuation of a policy laid out in May last year when Georgia’s then-energy minister Kakha Kaladze said that Georgia would stop buying Russian gas. He had earlier switched the way that Georgia imported Russian gas from a barter deal to a paid-for deal.

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Kazakhstan wants improved offer from Karachaganak partners

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ALMATY/SEPT. 15 2017 (The Conway Bulletin) — — Kazakh officials want an improved offer from Shell and ENI to end a long-running dispute over a $1.6b profit sharing claim at the oil and gas Karachaganak project in the north of the country.

They told the Reuters news agency that the Shell-led consortium operating the plant, Kazakhstan’s biggest gas producer, had offered to build a gas processing plant in exchange for dropping the profit sharing claim.

Kazakh Energy Minister Kanat Bozumbayev declined to confirm this but did say that the offer fell short of his expectations.

“We have calculated the value of the offer to Kazakhstan and it does not meet our demands and we have already told that to consortium members,” he said told Reuters.

“We have asked the consortium to offer something in addition.”
Kazakhstan has said that it is owed an additional $1.6b from a profit sharing scheme. The tax authorities have also investigated Karachaganak and some Western commentators have said that they are simply looking to squeeze extra cash out of their partners.

The consortium operating Karachaganak has not commented.
Shell and Italy’s Eni are the field’s operators and largest shareholders with a 29.25% stake each. Chevron (18%), Lukoil (13.5%) and state-owned Kazmunaigas (10%) own the rest.

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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017

Azerbaijan restarts gas imports from Russia

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AUG. 31 2017 (The Conway Bulletin) — Russia’s Gazprom started pumping gas to Armenia again after month-long repairs to the North Caucasus-Transcaucasus pipeline that crosses Georgia were finished. The pipeline had been the only import route for gas into Armenia, although over the past couple of years Armenia has been negotiating gas supply deals with neighbouring Iran.

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(News report from Issue No. 342, published on Sept. 7 2017)

Georgian PM flies to Ashgabat for talks

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AUG. 30 2017 (The Conway Bulletin) — Georgian PM Giorgi Kvirikashvili flew to Ashgabat for talks with Turkmen president Kurbanguly Berdymukhamedov that focused on transit cooperation and various energy projects. Turkmenistan has become increasingly vocal about using the Caspian Sea transit route to export gas. Georgia is key stage-post on this route as it hosts pipelines running from Baku and the Black Sea port of Batumi is a major entrance into, and exit from, the region.

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(News report from Issue No. 342, published on Sept. 7 2017)