Tag Archives: hydrocarbons

Kazakh government to fine Karachaganak $2b, say sources

ALMATY, OCT. 27 2015 (The Conway Bulletin) — The Kazakh government is considering levying a heavy fine against Karachaganak, Kazakhstan’s largest gas field, worrying observers who said this could mean a revival of resource nationalism.

According to sources quoted by Bloomberg News, the Kazakh government is likely to impose a penalty against the consortium operating Karachaganak for as much as $2b, in an attempt to earn quick cash for its crisis-hit state budget.

The sources, described as being familiar with the project, said the fine was for failing to meet contractual obligations.

A $2b fine would be the largest-ever penalty imposed on an energy consortium in Kazakhstan, exceeding a 2014 fine on Kashagan of $737m and a 2007 claim on Tengiz for $609m. British BG Group and Italian Eni own 29.5% each. Chevron and Lukoil are the smaller shareholders with 18% and 13.5% respectively. State-owned Kazmunaigas bought a 10% stake in the project in 2012, after a two-year tax dispute.

BG Group, Eni, Kazmunaigas and the Kazakh government all declined to comment.

The Bloomberg story hinted at resource nationalism, said Lawrence Markowitz, professor of Political Science at Rowan University.

“Contestation between Kazakhstan’s government and multinational corporations centres on contracts and this could be a case of a government using fines and penalties to be more predatory on the wealth these deposits generate,” Mr Markowitz told the Bulletin.

Other observers said Kazakhstan may be positioning itself ahead of a contract renegotiation.

“There is certainly pressure in Kazakhstan to change the Production Sharing Agreement contracts signed in the 1990s, because they were too generous for foreign companies,” said Nygmet Ibadildin, professor of Energy Policy at KIMEP University.

Shell agreed to buy BG earlier this year but speculation has mounted that Kazakhstan could exercise its preemptive rights to jump in and buy BG’s share.

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

Japan’s Sumitomo to build Turkmenistan power plant

OCT. 23 2015 (The Conway Bulletin) — Japan’s Sumitomo Corporation will build a $300m power plant in Turkmenistan, a significant move for relations between the countries and the Turkmen gas sector.

Sumitomo and state-owned Turkmengaz signed a deal on a new, 400 megawatt gas-fired thermal power plant to be built in the north of the country.

The deal was signed during Japanese PM Shinzo Abe’s visit to Turkmenistan. In total, Japan committed over $18b for various investments in energy and infrastructure projects in Turkmenistan, strengthening economic and diplomatic ties between Tokyo and Ashgabat.

Another Japanese company, Mitsubishi Hitachi Power Systems will provide the gas turbines for the new plant, which is expected to be completed by 2018.

The new plant will allow Turkmenistan to improve its electricity grid, boosting power generation in the north of the country, far removed from the gas-producing regions in the south. Demand for electricity is growing in Turkmenistan.

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

Kazakhstan’s Intergas to buy back Eurobonds

OCT. 26 2015 (The Conway Bulletin) — Intergas Central Asia said it would buy back $270m of its outstanding Eurobonds due in 2017, media reported. Intergas is a subsidiary of Kazakhstan’s state owned pipeline company KazTransGas. Analysts said the buyback was positive for Intergas as it reduced its exposure to Kazakh banks.

ENDS

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

Georgia’s energy minister to visit Iran

OCT. 28 2015 (The Conway Bulletin) – Highlighting increasingly good relations between Georgia and Iran, Georgian energy minister Kakha Kaladze said he would travel to Tehran next month to meet his Iranian counterparts. Georgia needs to increase the amount of gas it imports to meet demand.

ENDS

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

Kazakhstan can impose Karachaganak fine

OCT. 27 2015 (The Conway Bulletin) – The Kazakh government could impose a $2b penalty on the consortium operating the Karachaganak gas field, Bloomberg News quoted sources as saying.

ENDS

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

Nostrum cuts expectations in Kazakhstan

OCT. 27 2015 (The Conway Bulletin) — Hit by delays in infrastructure maintenance, London-listed Nostrum Oil & Gas reduced its production target for 2015 by 9% to 41,000 barrels of oil equivalent per day. In its Q3 statement, Nostrum said repair work at a Kazakh state-owned gas export pipeline was now complete and production was back to normal.

ENDS

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

Kazakhstan’s Samruk-Kazyna gets Kashagan loan

OCT. 27 2015 (The Conway Bulletin) – Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, signed a five-year loan agreement for up to $1.5b to help fund its purchase of a 8.4% stake in the Kashagan oil field. Kazmunaigas, Kazakhstan’s state-owned energy company, agreed earlier this year to sell half its 16.81% stake in Kashagan to Samruk–Kazyna. The manoeuvre is considered a mechanism to help Kazmunaigas raise funds during this period of depressed oil prices.

ENDS

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

TAPI shareholders sign deal in Turkmen capital

OCT. 24 2015 (The Conway Bulletin) — TAPI consortium members signed a deal described by the Asian Development Bank as a milestone shareholders’ agreement at a meeting in Ashgabat, an important step towards turning TAPI from a paper project into a real project. The TAPI project aims to build a pipeline to pump Turkmen gas to India, across Afghanistan and Pakistan.

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

Stock market: Centerra Gold, KAZ Minerals

OCT. 30 2015 (The Conway Bulletin) — The US Federal Reserve Bank’s hinted that interest rates could be increased in December, hitting stock markets worldwide. South Caucasus- and Central Asia-related shares were no exception.

Miners were hit badly. Kyrgyzstan- focused Centerra Gold saw its shares lose over 9% in Toronto this week, closing at 7.36 Canadian dollars on Friday.

KAZ Minerals shares were also down 9%, closing at 116p on Friday.

After announcing it would pay a dividend to its shareholders on Oct. 30, Central Asia Metals reversed a slow start and closed on Friday, with a marginal positive growth, at 163p/share in London.

Oil and gas producers also suffered, despite oil prices gaining 2% this week with Brent crude closing at $49.5/barrel. Kazakhstan-focused Tethys Petroleum and Nostrum Oil & Gas both lost around 10% this week.

After reaching an 8-month high at £21.35/share last Friday, London-listed Bank of Georgia fell by 6.5% to £20.00. Last week its shares rallied after a healthcare group it holds a large stake in announced an IPO price range that valued the company at around $500m.

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

Georgia’s energy minister meets Gazprom CEO

OCT. 27 2015 (The Conway Bulletin) – Georgia’s energy minister Kakha Kaladze met with Gazprom CEO Alexei Miller in Milan, their second meeting in a month to discuss Georgian gas supplies from Russia. Georgia needs to increase gas imports to meet demand but buying gas from Russia, they fought a war in 2008, has irritated many people.

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