DEC. 8 2015 (The Conway Bulletin) – Kazakh economy minister Yerbolat Dossayev said Kashagan would restart production by end-2016. His statement reinforces previous statements from the Kazakh government which have been more optimistic on the Caspian Sea oil field’s start date than Western companies.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 9 2015 (The Conway Bulletin) – Alexei Miller, the chairman of Russia’s Gazprom, said he is in talks with Iran and Armenia over a gas swap deal. The deal would see Iran receive Russian oil in the north via Azerbaijan. In return Iran would supply Armenia with gas. Armenia currently receives Russian gas via Georgia.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 3 2015 (The Conway Bulletin) — As the diplomatic row between Russia and Turkey intensifies, some analysts believe it could spill over into a gas war similar to the Russia- Ukraine crises of the past decade.
When Turkish PM Ahmet Davutoglu visited Baku last week, his statement on the acceleration of construction works for the TANAP pipeline rebounded all over the press.
Mr Davutoglu said he had reached an agreement with Azerbaijan’s President Ilham Aliyev to inaugurate the new gas pipeline from Azerbaijan to Turkey ahead of schedule. That is, before 2018.
Some, including myself, read this as a poke in the eye to Russia, which had imposed a food and travel embargo and suspended work on another pipeline, Turkish Stream, that would have connected Russia and Turkey via the Black Sea.
Turkey wanted to show Russia that it had options and where better to go to prove this than its erstwhile ally Azerbaijan – also a former Soviet state?
But there is also another important point that should not be overlooked. What gas would a TANAP pipeline completed early actually carry?
Supply for TANAP will come from the expanded Shah Deniz gas field (Shah Deniz-2) off the coast of Baku in the Caspian Sea.
But Shah Deniz-2 will only come online with its first gas in 2018. It simply can’t be brought forward.
So the question remains as to what gas Azerbaijan will use to fill the 16bn cubic metres it promised to its western customers if TANAP is built early.
In short, the acceleration of construction works at TANAP is meaningless before the gas is also ready to be shipped.
It is political hot air.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 11 2015 (The Conway Bulletin) — Oil prices fell by almost 10% to under $40/barrel this week — its lowest price since 2009. This hit several of the region’s energy companies who were already dealing with a sharp slump in their share prices.
Tethys Petroleum closed at 4.38p on Thursday, down 2.7% in one week. Roxi Petroleum continued to decline, closing at 6.38p on Thursday, down 8.9% on the week. Nostrum Oil & Gas shares lost 3% to close at 369.5p.
Commodity companies were hit by the general downturn in the market and the news of giant miner Anglo American scaling down operations dramatically. Gold prices fell again by 2% this week, hitting $1,067/ounce.
This affected Kazakhstan-focused mining companies such as Central Asia Metals and KAZ Minerals, which lost 8.9% and 3.8% respectively this week. Kyrgyzstan-focused miner Centerra Gold surged 4%in the Toronto Stock Exchange to 7.94 Canadian dollars, against the trend of other companies, perhaps rallying on its positive results in the first three-quarters of the year.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 8 2015 (The Conway Bulletin) – Georgia’s energy minister Kakha Kaladze met with Alexei Miller, the chairman of Russia’s Gazprom, in Luxembourg to discuss increasing imports of Russian gas. No deal has been signed although even the talks have stirred controversy in Georgia where memories of the 2008 war against Russia are still very fresh.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 8 2015 (The Conway Bulletin) — Seemingly determined to be the bearer of positive news, Kazakh minister of economy Yerbolat Dossayev said construction on expanding the Tengiz oil project would start next April and that the Kashagan oil field would finally begin production in December 2016.
These dates confirm earlier plans to speed up the much-delayed Kashagan oil field in the Caspian Sea and expand the Chevron-led Tengiz oil- field sooner rather than later.
But some of the numbers are lower than the government had hoped for.
Deputy energy minister Magzum Mirzagaliyev said the Kashagan oil- field will reach an output of 13m tonnes/year by 2020, the equivalent of 250,000 barrels of oil/day. In June, NCOC ex-director Stephane de Mahieu said Kashagan would reach 370,000 barrels/day by the end of 2017. The NCOC consortium includes Eni, Kazmunaigas, Shell, ExxonMobil, Total, CNPC and Inpex.
Tengizchevroil – which includes Chevron, ExxonMobil, Kazmunaigas and LukArco – delayed their expansion plan to Tengiz this year because of a drop in oil prices. It has not commented on an April expansion date.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 1 2015 (The Conway Bulletin) — Norwegian oil and gas company Statoil completed its retreat from the South Caucasus gas industry with its sale of a 20% stake in the Trans-Adriatic Pipeline (TAP), part of a pipeline network that will pump gas from Azerbaijan to Europe.
Italian pipeline company Snam bought Statoil’s TAP stake for €208m ($227m), increasing Italy’s commitment in the Southern Gas Corridor, running from Azerbaijan, through Turkey and Greece, to Italy.
Over the past two years, Statoil has quit Azerbaijan,’s gas sector selling its 25% stake in the giant Shah Deniz field and its 15.5% stake in the South Caucasus Pipeline, which transports gas from Shah Deniz to Georgia and Turkey.
Statoil hailed its sale of its stake in TAP as generating value for share- holders but the final price of €208m is lower than the €400m that industry analysts had forecasted over the summer.
Statoil still owns an 8.56% stake in the Azeri-Chirag-Guneshli field and a 8.71% share in the Baku-Tbilisi-Ceyhan pipeline.
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(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 3 2015 (The Conway Bulletin) – If Turkmenistan wants to realise its potential and become one of the world’s top energy exporters it should improve its foreign investment climate, Reuters quoted Daniel Rosenblum, deputy assistant secretary for Central Asia at the U.S. Department of State, as saying on a trip to Ashgabat.
Western companies have found it difficult to enter the Turkmen energy sector despite an apparent abundance of hydrocarbon wealth. It is estimated that Turkmenistan holds the world’s four largest gas reserves.
Turkmenistan only offers Western companies service contracts on its various gas projects and not the production sharing agreements that many want. And this, Mr Rosenblum said, would hold back Turkmenistan’s development as a gas exporter.
“A critical element of success is to create the right mix of incentives,” he said according to the Reuters report.
Most of Turkmenistan’s gas flows to China through a network of pipelines that cross Central Asia but Turkmen officials have said they want to widen the client base. This includes pumping gas to Europe and India.
Turkmenistan will officially begin work on the TAPI pipeline that will, it hopes, eventually pump gas directly to consumers in India. Its an ambitious project and one that Western companies had previously expressed interest in.
The lack of a production sharing agreement, though, coupled with a poor record for corruption and the sheer ambition of building a 1,700km pipeline across unstable Afghanistan, with all its security concerns, has deterred potential suitors.
In a thinly veiled criticism of Turkmenistan, Mr Rosenblum told a conference: “Land-locked countries with potentially large resources, such as Turkmenistan, need to move expeditiously to capture market opportunities since their competitors are not idle.”
Although he wasn’t specific, Mr Rosenblum appeared to be saying that Western companies with their expertise and know-how would be able to help Turkmenistan speed up development of its hydro-carbon sector.
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(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 2 2015 (The Conway Bulletin) — Kazmunaigas, Kazakhstan’s state-owned energy company, said it reached an agreement with international oil trader Vitol for the forward sale of crude oil for up to $3b, a deal that the debt-ridden Kazakh producer needs to maintain financial stability during a period of low oil prices.
Vitol will buy oil from Kazmunaigas’ share of oil produced at the Tengiz field in western Kazakhstan and then pumped by the CPC pipeline around the northern tip of the Caspian Sea to Novorossiysk in Russia.
Kazmunaigas, commonly known as KMG, will receive advance payments in the short term.
“It is expected that KMG will be able to draw the first tranche within 2-4 months,” the company said in a statement.
Neither company disclosed the amount of oil that will be traded and the duration of the contract, but a Bulletin calculation showed that the deal could range between 3 and 5 years, depending on how much of the 2-3m tonnes of oil KMG exports each year from Tengiz Vitol will buy and how big the discount is.
By committing to the sale of futures, Kazmunaigas earnsmuch needed cash in the short term to cover its outstanding debts. But there will be a reasonable discount which will manifest itself over the next few years.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 4 2015 (The Conway Bulletin) — Oil prices fell by 2.3% to $43/barrel of Brent crude this week.
Tethys Petroleum shares jumped 15% in one day on Dec. 2 to 4.88p, but fell later in the week to close at 4.50p on Friday, a 5.9% increase over the last week.
Roxi Petroleum shares fell sharply to 7p on Friday, down 10% from last week.
Gold prices rose by 2.7% this week to $1,086/ounce, which, together with positive industrial news, propped up the region’s principal gold miners.
Kyrgyzstan-focused miner Centerra Gold gained around 6% this week on the Toronto Stock Exchange, closing at 7.61 Canadian dollars on Friday.
After announcing a new financing deal for its gold deposit in Armenia, Toronto-listed gold miner Lydian International shares gained 30% in just two days. Lydian share price then fell back to 0.27 Canadian dollars on Friday.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 259, published on Dec. 4 2015)