OCT. 20 2015 (The Conway Bulletin) – International ratings agency Standard & Poor’s said it will stop including the Kashagan oil field in its economic forecasts for Kazakhstan because of continuous delays in production.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 23 2015 (The Conway Bulletin) — When OPEC calls, Kazakhstan and Azerbaijan are unlikely to answer.
OPEC, an organisation for oil exporting countries, is seeking to coordinate a cut in production with non-OPEC countries to lift oil prices.
Acting as a cartel, OPEC can determine production levels in order to control global oil prices. It has done so repeatedly over the past decades.
Strapped for cash and reliant on oil exports, Kazakhstan and Azerbaijan are not OPEC members and do not enjoy the same market power as Saudi Arabia or Russia.
Because their action would have little effect on oil prices they are unlikely to play OPEC’s game, according to Daniel Yergin, vice- chairman of the IHS consulting company and one of the most authoritative voices on Caspian energy issues.
“I think they will not cooperate. They (Azerbaijan and Kazakhstan) are typical non-OPEC countries who simply produce at a maximum they can,” Mr Yergin told Reuters.
Lower oil prices and ageing fields have pushed production numbers down in Kazakhstan and Azerbaijan (minus 2% and 3% respectively) and they simply cannot afford to arbitrarily cut back production in concert with OPEC.
The economies of these two Caspian countries are heavily reliant on hard currency revenues from oil exports. They’ll want to keep oil production at a maximum.
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(News report from Issue No. 253, published on Oct. 23 2015)
OCT. 10 2015 (The Conway Bulletin) – Georgia is in talks with Russia’s Gazprom to import gas, Georgian energy minister Kakha Kaladze told media, highlighting the improved relations between the two neighbours. Georgia currently exports nearly all its gas from Azerbaijan although it hosts a pipeline pumping gas from Russia to Armenia.
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(News report from Issue No. 253, published on Oct.16 2015)
OCT. 15 2015 (The Conway Bulletin) – Russian President Vladimir Putin flew to Astana where he signed a deal with Kazakh leader Nursultan Nazarbayev to jointly explore and develop the north Caspian Sea for hydrocarbon reserves.
The deal, signed before a meeting of leaders from the former Soviet Union, came roughly a week after Kazakhstan also hosted Ukrainian president Petro Poroshenko. He signed deals with Mr Nazarbayev to increase cooperation in energy and aerospace. The timings of the two leaders’ visits to Astana highlights just how pressured the diplomatic space that Kazakhstan has to operate in is. It needs to keep relations with both Ukraine and Russia, who are locked in a proxy war in eastern Ukraine, sweet.
“We have big plans on joint oil production in the Caspian Sea,” Mr Putin said after signing the deal.
Kazakhstan and Russia also signed a deal for the Russian military to test missiles that would spread debris over a patch of Kazakhstan.
A week earlier, Mr Poroshenko had been in town talking up ties with Kazakhstan. This week, Kazakhstan’s ministry of defence said that it had signed a deal with Ukraine to boost cooperation in aviation.
Mr Nazarbayev has previously touted Kazakhstan as the ideal place for trying to thrash out a peace deal between Russia and Ukraine. There has been no formal move to hand this role to Kazakhstan but but leaders do apparently appear relaxed about flying to Astana in quick succession.
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(News report from Issue No. 253, published on Oct.16 2015)
OCT. 6 2015 (The Conway Bulletin) — KazTransGas, Kazakhstan’s state owned gas distributor, warned Georgia it might take their dispute over its subsidiary to international arbitration if Georgia failed to restart negotiations. KazTransGas is looking for compensation for the $130m it spent on its subsidiary KazTransGas-Tbilisi in 2006-09 before the Georgian government took control of the company.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 9 2015 (The Conway Bulletin) — The biggest mover in the stock markets for Central Asia and the South Caucasus was London-listed KAZ Minerals, which gained a staggering 65% since the beginning of October at 145p on Friday. Its performance was in line with most commodity producers which were hit by the Glencore slump last week.
Kazakhstan-focused Nostrum Oil & Gas was stable this week at around 524 pence, after rebounding from a sharp drop last week. Its failed takeover offer for Tethys Petroleum affected its performance in the market.
Polyus Gold continued its roller- coaster to end the week at 198 pence. Polyus has shown a volatility of +/- 3% over the past three weeks.
In local markets, KEGOC, Kazakhstan’s state-owned electricity company became one of the strongest players in KASE, gaining over 25% in the past three weeks. However, because its stocks are denominated in tenge, the value of its assets has not fared as well as it seems. Speculative moves behind the multi-million dollar transactions of the past weeks have turned KEGOC into an appealing investment in a market marred with worsening assets.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 7 2015 (The Conway Bulletin) — Scotland-based Wood Group won a service contract to supply an automated system for crude storage facilities at the Tengiz oil field in Western Kazakhstan. It said the automated system would increase storage capacity. Bechtel, a US-based engineering company, signed the multimillion dollar deal with Wood Group.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 5 2015 (The Conway Bulletin) — State-owned Japan Oil, Gas and Metals National Corporation said it will explore Kazakhstan for mineral deposits. Preliminary investigations will be conducted, jointly with Kazakhstan’s state-owned company Kazgeologiya, in 2016. Japan has bought large amounts of oil from Kazakhstan this year.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 3 2015 (The Conway Bulletin) – The Turkmen state-owned natural gas company Turkmengaz terminated an engineering contract with Orgregionproyekt, a Russian company, signed in 2011, local media reported. It’s unclear if the cancelled contract was linked to the economy or not.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 4 2015, YEREVAN (The Conway Bulletin) — At a meeting in Tehran, the Iranian and Armenian energy ministers said they will increase the volume of their gas-for-electricity swap deal, deepening relations between the two neighbours.
Alireza Kameli, managing director of the National Iranian Gas Export Company, told local media that Iran is ready to supply as much as 2.3b cubic metres of natural gas yearly to Armenia through the existing 140km long pipeline. According to Armenian government figures, Armenia currently imports less than 400m cubic metres of gas every year from Iran. By comparison, Armenia imports roughly five times as much gas from Russia as it does from Iran every year.
“Armenia is currently unable to take full advantage of the capacity of the pipeline because of the lack of necessary infrastructure,” Mr Kameli said alluding to the lack of electricity infrastructure in Armenia.
Still the the two sides are working together on extending Armenia’s electricity transmission network. Armenia is building a third high-voltage transmission line, part-funded by Iran. According to the Armenian ministry of energy, the country currently exports 1.8b kWh of electricity to Iran every year, a volume that can be increased up to 6.9b kWh.
Electricity is one of their biggest exports for Armenia. It’s also become highly political. This year thousands of people protested in Yerevan against proposed price rises. The government eventually agreed to subsidise the price rises.
And this month, the government agreed the sale of the electricity distribution network by Russia’s Inter RAO to an Armenian billionaire.
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(News report from Issue No. 251, published on Oct. 9 2015)