Tag Archives: hydrocarbons

Kazakhstan-focused Nostrum drops in H1

JULY 27 2016 (The Conway Bulletin) — Kazakhstan-focused Nostrum Oil & Gas posted a 41% drop in revenues in H1 2016, compared to last year because of continued low oil prices. Production in H1 fell by 12% to an average of 38,993 barrels of oil equivalent per day. The company said that the full-year production forecast remained at an average of 40,000 barrels of oil equivalent per day.

ENDS

(News report from Issue No. 291, published on Aug. 1 2016)

Oil output falls in Kazakhstan

JULY 28 2016 (The Conway Bulletin) — Due to sustained low oil prices, Kazakhstan’s oil production could shrink further this year, according to Asset Magauov, deputy energy minister. Mr Magauov said that a majority of the companies operating in the country reported a decline in production in 2015. The official forecast for 2016 is 75.5m tonnes, a 5% reduction compared to last year. In March, then-energy minister Vladimir Shkolnik had projected a production target of 77m tonnes for 2016.

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(News report from Issue No. 291, published on Aug. 1 2016)

EBRD considers Azerbaijani gas

JULY 26 2016 (The Conway Bulletin) — The European Bank for Reconstruction and Development (EBRD) said it is negotiating financing TAP, a trans-Adriatic gas pipeline which forms part of the so-called Southern Gas Corridor network that will pump Azerbaijani gas to Europe. In an interview with AP, the EBRD said it is looking to invest €500m ($550m) in the project. Azerbaijan’s state-owned SOCAR (20%), BP (20%), Italy’s Snam (20%), Belgium’s Fluxys (19%), Spain’s Enagas (16%), and Switzerland’s Axpo (5%) own TAP.

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(News report from Issue No. 291, published on Aug. 1 2016)

Stock market: Nostrum Oil and Gas

AUG 1 2016 (The Conway Bulletin) — Amsterdam-based Nostrum Oil & Gas has posted lower revenues and production in H1 2016, but its share price continued to hold at around 300p because of bullish forward forecasts.

The company’s CEO Kai-Uwe Kessel said that in an era of low oil prices, cost-cutting is paramount. He also said that the company was focusing on building a small pipeline that would reduce its transport costs in 2017.

By focusing on cutting costs, however, the company seems to have been unable to regain either its production or its revenue stream from last year. Both were down by 12% and 41% respectively in H1 2016.

In the company’s statement, Mr Kessel remained confident that Nostrum’s production target will be met by the end of the year.

“We look forward to increasing production throughout the second half of the year to achieve our target 2016 production of 40,000 boepd,” he said.

ENDS

(News report from Issue No. 291, published on Aug. 1 2016)

Gazprom Kyrgyzstan repairs pipeline

JULY 26 2016 (The Conway Bulletin) — Maintenance work at the Bukhara-Tashkent-Bishkek-Almaty gas pipeline will result in gas cutoffs in several Kyrgyz towns, the press service of Gazprom Kyrgyzstan said. The pipeline is part of a Soviet-designed system pumping Uzbek gas to Kyrgyzstan and Kazakhstan and the repairs and gas cutoffs show just how antiquated the pipeline network has become.

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(News report from Issue No. 291, published on Aug. 1 2016)

Azerbaijan’s energy company restarts its platform

JULY 15 2016 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR said that it had resumed operations at an oil platform badly damaged by a storm and a fire in December. SOCAR said that work at one of the 28 oil wells operated by Platform No. 10 in the shallow-water Guneshli field had restarted. 31 oil workers died in the storm on Dec. 11, the worst offshore accident at an oil platform for nearly 30 years.

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(News report from Issue No. 290, published on July 22 2016)

Oilfield in Kazakhstan issues bond

JULY 21 2016 (The Conway Bulletin) — Tengizchevroil (TCO), the Chevron- led consortium exploiting the Tengiz oilfield in western Kazakhstan, issued a $1b 10-year Eurobond with a 4% coupon, lower than previously forecast, RIA Novosti said. Earlier in July, TCO approved a $37b expansion plan, which will boost production at Tengiz by 45% by 2020.

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(News report from Issue No. 290, published on July 22 2016)

Azerbaijan’s gas corridor to be funded

JULY 20 2016 (The Conway Bulletin) — Azerbaijan’s finance minister Samir Sharifov said that his country is in talks with several international financial institutions to raise funds to pay for the construction of the so-called Southern Gas Corridor, a network of pipelines that will pump gas from the Caspian Sea to Europe. Mr Sharifov told the FT that the World Bank, the European Bank for Reconstruction and Development and the Asian Development Bank are all considering supporting the project.

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(News report from Issue No. 290, published on July 22 2016)

Turkey is a vital transit route for the region

JULY 22 2016 (The Conway Bulletin) — The brief closure of the Bosphorus Strait to oil tankers for a few hours on July 15/16 during a failed coup attempt was a reminder of just how critical a stable, reliable and open Turkey is for trade flows into and out of Central Asia and the South Caucasus.

The Bosphorus Strait connects the Black Sea with the Aegean Sea and the Mediterranean Sea. If it is closed, Georgia’s Black Sea ports of Poti and Batumi are cut off – key gateways for the region for a variety of goods.

It’s an essential corridor too for oil shipments from the Chevron-lead Tengizchevroil project in western Kazakhstan which sends oil via a pipeline around the Caspian Sea to the Russian Black Sea port of Novorossiysk where it is loaded onto tankers and sent out to the rest of the world via the Bosphorus Strait.

But it’s not just the Bosphorus Strait which makes Turkey a vital transit route for Central Asia and the South Caucasus. Turkey also hosts a series of oil and gas pipelines which will link the Caspian Sea to Europe, set to become an increasingly important market.

Samuel Lussac, Caspian research manager at Wood Mackenzie, said international conventions should prevent Turkey from closing the straits but, if it did, it would have major repercussions.

“This would have a massive impact, as you have more than 1 million barrels per day of Kazakh and Russian crude shipped from Novorossiysk,” he said.

He also said the BTC oil pipeline that runs from Baku to Ceyhan on Turkey’s Mediterranean coast was an important route.

“From a transit perspective, Turkey is critical for Azerbaijan. Most of Azerbaijan’s crude is transported via BTC which goes via Turkey,” he said.

And the region’s reliance on Turkey as a transit partner is growing. New gas pipelines connecting the Caspian Sea to Europe are currently being built, underscoring the importance of Turkish stability.

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(News report from Issue No. 290, published on July 22 2016)

Kazmunaigas and KMG EP

JULY 22 2016 (The Conway Bulletin) — Kazakhstan’s oil and gas sector seems to be in a muddle with the corporate battle between Kazmunaigas, owned by the country’s sovereign wealth fund Samruk-Kazyna (90%) and the Central Bank (10%), and its London-traded upstream subsidiary, KMG EP.

The power struggle between the two seems complicated, but it’s not. Kazmunaigas’ covert intention is to increase its 57% stake in KMG EP because it wants to take more control of its profitable upstream business, especially now that oil prices are low.

KMG EP’s independent directors, on the other hand, want other minority shareholders to resist Kazmunaigas’ pressure. The alternative, according to them, will be a de-listing from the London Stock Exchange, as independence would not be guaranteed.

Kazmunaigas has always said that its primary intention is not to buy out its subsidiary, but to change the terms through which the two companies interact, to smooth bureaucracy and make the businesses more agile.

But that’s not its real goal. If it was, it would have not have raised its initial offer to minority shareholders of $7.88/GDR to $9/GDR. And it would have not have made concessions on its corporate governance plans immediately after the first negative reaction from KMG EP’s independent directors.

If Kazmunaigas gets its way and buys out most of the minority shareholders, it may force independent directors to resign and the company to de-list from London’s GDR market.

For investors looking for a transparent sector to bet on, this won’t be good news.

ENDS

(News report from Issue No. 290, published on July 22 2016)