Tag Archives: hydrocarbons

Kazakhstan predicts fuel price increase

MARCH 14 2014 (The Conway Bulletin) — A rare admission from a Kazakh insider that the country’s energy policies may not be working hints at future fuel price increases, analysts have said.

Sauat Mynbayev, chairman of state-owned KazMunaiGas, said sending Kazakh oil to China to be processed into fuel and then re-importing it to make up for a shortfall in domestic refining capacity has become too expensive.

“The transit operations regarding the refining of Kazakhstan’s oil in China has become unprofitable,” media quoted him as saying.

Analysts immediately unpicked his statement. What this meant, they said, was that fuel prices would rise shortly.

And that, as the government knows, will be deeply unpopular.

Oil-rich Kazakhstan has a chronic lack of refining capacity. The three refineries at Shymkent, Pavlodar and Atyrau are often under repair. New refineries are only scheduled to come on-stream in five or six years time.

To make up for the shortfall, Kazakhstan is importing refined fuel from China and Russia. It is also sending unrefined fuel into China for processing and then shipping it back over the border.

Added to this complex arrangement is Kazakhstan’s 20% currency devaluation in February which makes imports even more expensive.

Mr Mynbayev has just been made head of Kazakhstan’s Greco-Roman wrestling federation, a position that underlines his insider credentials.

For an insider to admit a policy problem is almost unheard of in Kazakhstan. As analysts have now warned, expect fuel price increases.

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(News report from Issue No. 176, published on March 19 2014)

Azerbaijan’s non-oil economy grows

MARCH 17 2014 (The Conway Bulletin) — Azerbaijan’s non-oil sector, a key benchmark of economic development, grew by 8.8% in January and February of this year compared to the same period in 2013, the state statistics agency reported. International economists have said that Azerbaijan needs to reduce its economic dependence on energy.

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(News report from Issue No. 176, published on March 19 2014)

Regional government appeases workers’ dispute in Kazakhstan

MARCH 5 2014 (The Conway Bulletin) — Acting as a peacemaker, the Aktobe regional government in north-west Kazakhstan stepped in to mediate in a labour dispute at an oil field operated by China’s state-run energy company CNPC.

The move highlights what appears to be Kazakhstan’s preferred policy when strikes are threatened — to appease labour unions rather than antagonise.

Kazakhstan is desperate to avoid a repeat of an oil workers’ strike in the western oil town of Zhanaozen in 2011 which ended in violence that killed at least 15 people.

Kazakh workers at CNPC AktobeMunaiGas say that they are treated unfairly, paid less and live in worse conditions compared to their Chinese counterparts.

This is a not a new complaint and, although China is a key energy client, Kazakhstan has pushed to improve worker conditions at Chinese companies. And this was no exception.

“The Commission recommended that managers improve the system of remuneration and create conditions for the production in accordance with labour laws,” the Aktobe government said in a statement.

Importantly sources in Aktobe said the threatened strike now appears to be on hold.

CNPC AktobeMunaiGas is one of Kazakhstan biggest oil producers, producing around 6m tonnes each year.

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(News report from Issue No. 175, published on March 12 2014)

China wants to build pipeline through Tajikistan

MARCH 11 2014 (The Conway Bulletin) — China’s state-run energy company CNPC set up a firm with Tajikistan’s Tajiktransgas to build a fourth branch of a pipeline pumping gas from Turkmenistan to China. China now dominates energy exports from Central Asia. Tajikistan will received a fee for hosting the pipeline.

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(News report from Issue No. 175, published on March 12 2014)

Kazakhstan increases oil export duty

MARCH 11 2014 (The Conway Bulletin) — Kazakhstan will increase export duty on oil by 33% to $80 per tonne from April 1 to boost budget revenues, economy minister Yerbolat Dossayev said. Kazakhstan may be using cash raised through the oil export tariff to bolster its economy after devaluing its currency by 20% in February.

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(News report from Issue No. 175, published on March 12 2014)

Kazakhstan’s new oilfield gets fined

MARCH 7 2014 (The Conway Bulletin) — Kazakhstan’s government slapped a $735m fine on the consortium developing the Kashagan Caspian Sea oil field for environmental damage from burning off gas during repairs to a leak. The $50b Kashagan project sprung a gas leak in October, barely a month after production started.

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(News report from Issue No. 175, published on March 12 2014)

Turkmen gas could transit Iran

MARCH 11 2014 (The Conway Bulletin) — Iran wants to transport Turkmen gas to a port on the Persian Gulf before shipping on to other clients, Hamidreza Araqi, head of the National Iranian Gas Company told Iran’s state news agency in an interview. Turkmenistan has become an increasingly important regional energy hub over the last few years.

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(News report from Issue No. 175, published on March 12 2014)

Azerbaijan cuts oil exports

MARCH 11 2014 (The Conway Bulletin) — Azerbaijan cut its oil exports by 6.5% in January and February to 3.73m tonnes compared to a year ago, Reuters quoted a source at Azerbaijani energy company SOCAR as saying. The source said that declining output was behind the drop in exports. Azerbaijan has been trying to stem a general decline in oil production.

(News report from Issue No. 175, published on March 12 2014)

Kazakh government fines oil company

FEB. 28 2014 (The Conway Bulletin) — The ecology department in the Mangistau regional government issued Ozenmunaigas, a subsidiary of Kazakh state-owned energy company Kazmunaigas, a fine of $1.8b for environmental damage. Ozenmunaigas refuted the claim. Environmental fines are sometimes used to pressure companies.

(News report from Issue No. 174, published on March 5 2014)

Total sells stake in Azerbaijan’s gas project

FEB. 28 2014 (The Conway Bulletin) — Looking to move out of projects in which it owns only a minority share, Total announced plans to sell its 10% stake in Azerbaijan’s Shah Deniz oil field.

Botas, a Turkish pipeline company, confirmed that it is in talks to buy Total’s stake.

There will probably be others interested too. Azerbaijan is an attractive place for countries in the region which need to boost their energy supplies. Last year India’s state-owned ONGC Videsh bought a stake in Azerbaijan’s biggest oil field for $1b.

A Botas spokesman explained the attraction of buying into Shah Deniz. “The acquisition of a 10% stake from Total is commercially profitable,” he told Reuters.

Shah Deniz is the mainstay of Azerbaijan’s gas industry and is currently the subject of a $28b expansion. Some analysts said the cost of the expansion may have triggered Total’s sale plans.

Importantly, a purchase by Botas of Total’s stake would reduce Western Europe’s interest in a gas field which is critical to its long-term energy plans. Azerbaijan has increasingly turned to Turkey, its natural partner, to push through infrastructure and energy projects.

Total is the second major energy company to exit the Shah Deniz project in the Caspian Sea in the past couple of months.

In December, Norway’s Statoil cut its stake in Shah Deniz to 15.5% from 25.5%. Statoil sold this 10% stake for $1.45b to BP and Socar, Azerbaijan’s state-owned energy company, indicating that Total may be able to fetch a similar price for its own stake.

(News report from Issue No. 174, published on March 5 2014)