APRIL 15 2016 (The Conway Bulletin) – Kazakhstan plans to complete the modernisation of the Shymkent oil refinery by the end of 2017. The Shymkent refinery, which has a capacity of 5m tonnes, makes up 30% of Kazakhstan’s domestic production of petroleum derivatives. It currently operates below capacity and is often closed for maintenance.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 21 2016 (The Conway Bulletin) – Samruk Energo, a subsidiary of Kazakhstan’s sovereign wealth fund Samruk-Kazyna, said it paid 11b tenge ($33m) to double its stake in the Balkhash Thermal Power Plant project to 50% minus one share. It did not say who it bought the stake from although last year Korea-based Samsung Engineering said it wanted to quit the project. The new Balkhash power plant will cost around $4.2b to build, according to Samruk Energo’s latest estimates.
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(News report from Issue No. 277, published on April 22 2016)
ALMATY, APRIL 21 2016, (The Conway Bulletin) — CNPC, China’s state owned energy company, said the Kashagan oil project will re-start production in June 2017, six months later than the Kazakh government has said it expects a restart.
At a press conference in Moscow, Wang Zhongcai, a vice-president at CNPC, said a launch, by the middle of 2017, was “likely,” Reuters news agency reported.
Just last week, Sauat Mynbayev, head of Kazakhstan’s state-owned Kazmunaigas, said the government forecast production by October and earlier this year, Exxon, which holds a 16.81% stake in the project, had also said it saw commercial production resuming by the end of 2016.
In September 2013, weeks after starting production, the consortium running Kashagan, one of the largest and most complex oil development projects in recent times, was forced to halt operations due to damaged pipelines.
In mid 2013, CNPC bought an 8.33% stake in Kashagan from Kazmunaigas. The share previously belonged to ConocoPhillips.
The other Kashagan shareholders also include Kazmunaigas, Total, Eni, Shell and Japan’s Inpex.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 19 2016 (The Conway Bulletin) – Turkmenistan increased gas shipments to China by a third in Q1 2016, Chinese state media reported. According to Xinhua news agency, Turkmenistan exported 10.6b cubic metres of gas between Jan and March 2016 via the Central Asia-China pipeline, which runs through Uzbekistan and Kazakhstan. The total annual capacity of the pipeline is 55b cubic metres.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 19 2016 (The Conway Bulletin) – The board of Ozenmunaigas, a subsidiary of Kazakhstan’s Kazmunaigas, said it named Dauletzhan Khasanov as its new CEO. Mr Khasanov, who is also deputy director of KMG EP, replaced Maksat Ibagarov. In Kazmunaigas’ 2015 annual report Ozenmunaigas was listed as a loss-making venture.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 22 2016 (The Conway Bulletin) – Energy ministers in Baku and Astana were frustrated last week after a meeting of oil producers in Doha failed to agree to freeze oil production at January 2016 levels. Advocates of capping production had said that this would help oil prices rebound.
But Azerbaijani and Kazakh objectives at the meeting may have been slightly different to those of Saudi Arabia or Russia.
Certainly, they wanted a deal to push up oil prices but they also wanted to use any agreement as a fig leaf to cover up their sinking production levels.
Azerbaijani and Kazakh production and export volumes are too low to influence oil prices directly. They are price takers, not setters. The problem is that their ageing oilfields are simply uneconomical at $40 or even $60/barrel and this has forced producers out of the market.
Azerbaijan and Kazakhstan will continue to “freeze” production, because there’s nothing else they can do. Their production, and consequently their exports, are bound to fall again this year, according to all major forecasting agencies, from OPEC to the IEA and the EIA.
A recent survey of oil experts at PRIX said, for the first time since it started polling, that global oil exports are bound to fall in Q2. Azerbaijan and Kazakhstan will be part of this trend, the quarterly report said.
Had the Doha meeting succeeded, Azerbaijan and Kazakhstan could have hidden falling production figures behind an international agreement.
Now they have to face further oil price volatility, the main outcome of the failed Doha talks, and without a smokescreen to defend their lower output figures.
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(News report from Issue No. 277, published on April 22 2016)
APRIL 15 2016 (The Conway Bulletin) – Dividends make investors happy, when they are issued, that is.
Kazakhstan’s largest publicly-traded companies have embarked on different dividend policies to weather an economic downturn that has, frankly, clobbered markets.
This week, mobile operator Kcell, which is part-owned by Sweden’s TeliaSonera and whose GDRs are listed in London, decided to give out 50% of its profits as dividend to its shareholders.
And, sticking to a long-held company policy, London-listed Central Asia Metals said it would pay out a total dividend of 12.5p.
At the opposite end of the dividend strategy spectrum, KMG EP and Halyk Bank, whose GDRs are also listed in London, ditched their annual payout to shareholders.
Both companies had traditionally given a piece of their profits to shareholders in the past.
KMG EP, a subsidiary of state-owned Kazmunaigas, said a collapse in oil prices over the past couple of years meant it couldn’t afford to pay out dividends and in a terse statement, Halyk Bank, owned by Timur Kulibayev and his wife Dinara Kulibayeva, daughter of President Nursultan Nazarbayev, said it too wouldn’t give shareholders a handout this year.
Halyk Bank didn’t explain its decision but Kazakhstan’s banking sector is bracing itself for an increase in non-performing loans linked to a 50% fall in the value of the tenge last year Broadly, these two different strategies provide an insight into Kazakh corporate mindset. Those companies with a stronger link to the Kazakh government and the political elite simply don’t need to pay dividends to keep their key investors happy.
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(News report from Issue No. 276, published on April 15 2016)
APRIL 15 2016 (The Conway Bulletin) – Roxi Petroleum shares have lost 28% of their value in the past three weeks, as investors grow wary of the company’s performance in Kazakhstan, its core focus.
The company operates the BNG contract area, not far from Tengiz in the Mangistau region.
Despite positive news coming from its deep wells, Roxi posted a decline in daily output from its shallow wells.
In January, the company had boasted the renewal of its licence to operate at BNG, which allowed Roxi to plan its investment strategy for the project.
But a 19% decline in output, probably due to technical issues linked to the expansion of the operations, has discouraged investors.
The market’s lukewarm reaction to both operational updates and share issues has increased the stock price volatility. After a sharp decline at the end of March, the stock appears to have stabilised at 9p/share.
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(News report from Issue No. 276, published on April 15 2016)
APRIL 13 2016 (The Conway Bulletin) – SOFAZ, Azerbaijan’s state oil fund, said it wants to diversify its investment portfolio and increase its investment in equities. According to the latest investment policy, it plans to raise to 15% from 10% the share of the Fund it invests in equities. According to the Fund’s report, it allocated just 6.5% of its portfolio into equity investments in 2014. Equities are considered riskier than fixed-income securities, real estate and gold, SOFAZ’s preferred investment destinations.
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(News report from Issue No. 276, published on April 15 2016)
APRIL 11 2016 (The Conway Bulletin) – Kazakhstan-focused oil company Roxi Petroleum said its shallow wells produced 865 barrels of oil per day in March, 19% lower than the level reported in January. Contacted by The Bulletin, Roxi declined to comment. It also didn’t post production data for February.
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(News report from Issue No. 276, published on April 15 2016)