Tag Archives: hydrocarbons

Low oil prices and rising costs hit KMG EP profit

NOV. 5 2015 (The Conway Bulletin) — London-traded KMG EP said sustained low oil prices had halved revenues in the first nine months of the year compared to the same period in 2014, a heavy warning for Kazakhstan that the near-term outlook for its economy is poor.

KMG EP saw its revenues fall, in US dollar terms, by 54% to 349b tenge ($1.8b), mirroring a 48% fall in Brent oil prices. Net profit dropped to 138b tenge ($703m), a fall of 49% in US dollar terms.

And it said that oil prices would remain weak.

“There is a risk that prices for the domestic market supplies for October to December 2015 will be significantly lower than the prices set in September 2015,” KMG EP said in the report.

KMG EP is among the top three producers of oil in Kazakhstan and participates in several international oil and gas projects.

It’s one of the Kazakh government’s main cash earning companies and its financial performance acts as a barometer on Kazakhstan’s economy. If Kazmunaigas, and KMG EP, is doing well, the Kazakh economy is generally doing well too.

KMG EP also said that in tenge terms, its salary costs have increased by 22%.

“This was largely due to an indexation of salary for production personnel by 7% in January 2015, the introduction of a Unified System of Wages for production employees from April 2014 onwards, a 10% increase in wages related to the devaluation of the Tenge from April 2014 onwards, and an increase in production bonuses from 25% to 33% for supporting production personnel from September 2014 onwards,” KMG EP said.

The Kazakh Central Bank stripped the tenge of its peg to the US dollar in August, effectively allowing the currency to devalue by 25%,a second devaluation in two years which has halved the tenge’s value. Businesses have had to promise employees salary increases to compensate for the fall in the value of the tenge, pushing up inflation across the country.

ENDS

(News report from Issue No. 255, published on Nov. 6 2015)

Georgia to buy gas from Iran

NOV. 5 2015 (The Conway Bulletin) – Keen to boost its imports of gas, Georgian energy minister Kakha Kaladze said that Georgia could buy Iranian gas through either Azerbaijan or Armenia. Mr Kaladze is due in Tehran later this month. Last month he started talking to Russia’s Gazprom about buying more gas, sparking anger from many ordinary Georgians. Georgia and Russia fought a brief war in 2008.

ENDS

(News report from Issue No. 255, published on Nov. 6 2015)

UOP to work on Azerbaijan’s refinery

NOV. 3 2015 (The Conway Bulletin) — US-based UOP signed a contract to provide technology and licensing for new units to be built at the Heydar Aliyev oil refinery near Baku. UOP is a subsidiary of Honeywell International. SOCAR, Azerbaijan’s state-owned energy company, has been looking for partners to modernise the country’s most important refinery. Azerbaijan needs to produce more petrol to hit growing demand.

ENDS

(News report from Issue No. 255, published on Nov. 6 2015)

Lukoil upgrades Uzbekistan field

NOV. 5 2015 (The Conway Bulletin) — Russian oil and gas company Lukoil completed the construction of two electric substations at a major gas field in Uzbekistan. Lukoil is the operating company at the Gissar gas field in the south of the country.

ENDS

(News report from Issue No. 255, published on Nov. 6 2015)

BP to stay at Azerbaijan’s Shah Deniz

NOV. 4 2015 (The Conway Bulletin) — Azerbaijan said it wants BP to remain as the operator in Shah Deniz, the country’s largest gas field. A senior official at SOCAR, Azerbaijan’s state-owned energy company, told Reuters that SOCAR and BP will continue cooperation for Phase 3 of the project.

ENDS

(News report from Issue No. 255, published on Nov. 6 2015)

Petronas shows interest in pumping Azerbaijani gas

NOV. 4 2015 (The Conway Bulletin) — Malaysia’s energy company Petronas said it is interested in buying stakes in the TANAP and TAP pipelines pumping gas from Azerbaijan to Europe. In April, Petronas bought Statoil’s 15.5% stake inAzerbaijan’s main gas field, Shah Deniz.

ENDS

(News report from Issue No. 255, published on Nov. 6 2015)

Smuggled petroleum flows into Kyrgyzstan

OCT. 28 2015 (The Conway Bulletin) – The amount of smuggled petroleum products flowing into Kyrgyzstan from Kazakhstan has increased enormously since the country joined the Kremlin-led Eurasian Economic Union in August, Melis Turgunbayev, director of state-owned energy company Kyrgyzneftegaz, said. He said the flood of smuggled goods had halved the trade in legally imported petroleum products.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Azerbaijan’s SOCAR signs contract with France’s Axens

OCT. 28 2015 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR signed a contract with French industrial group Axens to build new units at the Heydar Aliyev refinery near Baku. This is part of a $16.5b project to modernise the Baku refinery and boost production of petroleum products. Axens will build new diesel fuel and gas hydro-treating units at the refinery.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Turkmenistan hosts Poroshenko in snub to Moscow

OCT. 29 2015 (The Conway Bulletin) – In a snub to Moscow, Turkmen President Kurbanguly Berdymukhamedov hosted talks with Ukrainian President Petro Poroshenko on sending gas to Ukraine.

At the meeting in Ashgabat the two leaders signed several intergovernmental agreements on industrial and agricultural cooperation. Energy, though, was top of the agenda.

No deal was signed but both leaders said progress had been made.

“We are ready to increase supplies to Ukraine of products from our domestic fuel and energy complex and begin implementing joint projects in this sphere,” Mr Berdymukhamedov said according to state media.

Both Ukraine and Turkmenistan have fallen out with the Kremlin.

The Ukrainian government is locked in a protracted civil war in the east of the country against rebel forces funded by Russia. Turkmenistan has fallen out with Russia’s Gazprom over gas contracts. Earlier this year, Mr Berdymukhamedov called Gazprom an “unreliable partner”.

Russia has begun to cut gas supplies to Ukraine, forcing it to look for alternative suppliers. It has also sharply lowered its purchase of Turkmen gas over the past few years.

The biggest problem for Turkmenistan is how to avoid using Russia’s extensive pipeline network to send gas to Ukraine. It is exploring sending gas and oil products across the Caspian Sea, potentially via a new pipeline but also by ship. From there, gas and oil products can be transported to the Black Sea coast and then shipped to Ukraine.

Media said Mr Berdymukhamedov was due in Kiev next year.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

German firm to quit Turkmenistan

OCT. 22 2015 (The Conway Bulletin) — DEA Deutsche Erodel AG, a German oil and gas company, may be close to quitting Turkmenistan due to excessive bureaucracy, the exiled Alternative News Turkmenistan website reported. Lengthy custom clearance periods and slow licensing processes were the main complaints. The company has not commented.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)