NOV. 10 2014 (The Conway Bulletin) – An oil rig partially collapsed in the Azerbaijani sector of the Caspian Sea, killing at least one worker. This was the second fatal accident on Azerbaijan’s off-shore energy sector in less than a month, throwing up general safety concerns.
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(News report from Issue No. 208, published on Nov.12 2014)
NOV. 7 2014 (The Conway Bulletin) – Turkmenistan signed a deal with Turkey to provide gas for a new pipeline running from the Caspian Sea to Europe.
The deal means that Europe will take delivery of Turkmen gas directly, part of a major proposed new gas route that will avoid using Russian infrastructure.
Turkish president Tayyip Erdogan singed the deal with his Turkmen counterpart Kurbanguly Berdymukhamedov during a visit to Ashgabat.
“We attach great significance to deliveries of Turkmenistan’s natural gas to Europe via Turkey,” media quoted him as saying.
“Europe’s energy security is important for us.”
Over the past few years, Turkmenistan has boosted its exports of gas dramatically. China is its main client but it has also sorted out alternatives. Joining the so-called TANAP pipeline is a major boon for Mr Berdymukhamedov as well as for Europe.
The TANAP programme will pump gas from Azerbaijan’s Shah Deniz 2, which is under construction, to Central Europe by 2019 although it was always envisaged that other countries would also use the pipeline.
Turkmenistan has previously expressed some interest in sending its gas to Europe but had not unveiled any specific plans. Now that a deal with Turkey has been struck, it seems that Turkmenistan is committed to sending its gas to Europe.
Importantly, though, neither Mr Erdogan nor Mr Berdymukhamedov revealed any of the details of the deal.
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(News report from Issue No. 208, published on Nov.12 2014)
NOV. 5 2014 (The Conway Bulletin) – Replacing leaky pipes at the Kashagan oil field in the Kazakh sector of the Caspian Sea will cost around $3b, Reuters reported quoting a senior Kazakh official. Kashagan was to be the project that propelled Kazakhstan into the top tier of global energy suppliers instead it has run hugely over budget and time.
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(News report from Issue No. 208, published on Nov.12 2014)
NOV. 8 2014 (The Conway Bulletin) – Protests continued across parts of Kazakhstan over petrol shortages. One protest, captured in a photo essay on the US-funded Radio Free Europe/Radio Liberty website showed four men pulling a Soviet-era car to a petrol station near Almaty with a donkey cart.
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(News report from Issue No. 208, published on Nov.12 2014)
NOV. 10 2014 (The Conway Bulletin) – The sharp fall in the price of oil has acted as a wake-up call for Kazakhstan, economy minister Kairat Kelimbetov said in an interview with the FT.
Virtually admitting that Kazakhstan had been caught off guard by the decline by roughly a third in the price of oil since June, Mr Kelimbetovsaid that the government was the economy and to make it planning measures to shore up more attractive to investors.
“Next month the government will be ready to announce some counter cyclical fiscal policy, with big plans in infrastructure,” he said in the interview in Almaty.
Economists have warned that a devaluing rouble and falling oil prices will combined to knock Kazakhstan’s growth rate.
And the falling economy is also knocking investor confidence. Energy analyst Sergei Smirnov said that with Brent oil prices falling to a four year low of $82/barrel it makes projects such as Kashagan unprofitable.
“Offshore oil production is always much more expensive than onshore production,” he said according to media.
Kazakh officials who have staked their credibility and the country’s economic prosperity on Kasahgan but the project is already behind schedule and running over budget.
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(News report from Issue No. 208, published on Nov.12 2014)
NOV. 11 2014 (The Conway Bulletin) – In a speech to the nation, Kazakh president Nursultan Nazarbayev ordered Kazakhstan’s government to spend more money on infrastructure projects to counter the drag caused by a slowing Russian economy and falling oil prices.
The hastily arranged policy speech caught observers by surprise. Mr Nazarbayev usually waits until his state-of- the-nation speech in January to unveil new policy.
“The tough times for which we prepared ourselves with the National Oil Fund have come. It’s time to use these reserves,” he said during his combative address.
Kazakhstan has amassed a sovereign wealth fund of roughly $77b to counter downturns in commodity prices — the economy is mainly reliant on oil and gas exports — as well as to defend the tenge currency when it is under pressure from a falling rouble.
And Mr Nazarbayev is acutely aware that economic progress is a cornerstone of his popularity.
Mr Nazarbayev pledged to inject $3b every year into Kazakhstan’s economy, during 2015/17. He also said that inter-governmental banks have pledged to match this cash injection.
“The investment from the National Fund must be necessarily accompanied by structural reforms,” he said. “This money will be channelled to develop transport, energy, industrial and social infrastructure.”
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(News report from Issue No. 208, published on Nov.12 2014)
NOV. 7 2014 (The Conway Bulletin) – Kazakhstan and Kyrgyzstan agreed a deal for Astana to meet most of Bishkek’s electricity deficit, albeit at a price greater than Kyrgyz President Almazbek Atambayev would have wanted to pay.
The deal, finalised during a meeting between Kazakh President Nursultan Nazarbayev and Mr Atambayev in Astana, means Kyrgyzstan must pay roughly three times more for the imported electricity than Kyrgyz citizens pay for domestically-produced electricity. Importantly, it also shows Kazakhstan’s political clout in Kyrgyzstan is growing.
An estimated deficit of 2b kilowatt hours (kWh) this year, caused by a shortage of water in its reservoirs, public reaction to shutoffs drove Bishkek and the potential to sign the deal.
Mr Atambayev will be relieved to have made the deal to import 1.4b kWh from Kazakhstan but here are still problems. He will have to make up the shortfall from somewhere else, possibly Turkmenistan, and he will have to finance the extra costs.
Currently the government has suggested modest tariff increases beginning Jan. 1. These are bound to irritate people in Kyrgyzstan.
Other agreements reached by Mr Atambayev and Mr Nazarbayev at the meeting are also indicative and suggested that Kazakhstan maintains significant leverage over its weaker neighbour.
Mr Nazarbayev promised that a fleet of Kyrgyzstan-bound fuel wagons, owned by Russian energy giant Rosneft and held by Kazakh customs officials without explanation since April, would be allowed to cross the two countries’ mutual border. He also pledged a $100 million grant to Kyrgyzstan as the country prepares to enter the Eurasian Economic.
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(News report from Issue No. 208, published on Nov.12 2014)
OCT. 31 2014 (The Conway Bulletin) – BP said it would shut down one of Azerbaijan’s biggest oil fields — Central Azeri — for the whole of November for essential repair work. The shutdown will hit Azerbaijan’s oil output which is already under pressure.
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(News report from Issue No. 207, published on Nov. 5 2014)
NOV. 3 2014 (The Conway Bulletin) – Turkish president Recep Erdogan was due to visit Ashgabat on Nov. 6 for a two-day visit, media reported, his first to Central Asia since switching from being PM to the presidency in August. Mr Erdogan’s visit to Turkmenistan highlights just how important Turkmenistan has become as a global energy supplier.
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(News report from Issue No. 207, published on Nov. 5 2014)
OCT. 29 2014 (The Conway Bulletin) – Azerbaijani media has refuted a suggestion by Kazakh deputy energy minister Uzakbay Karabalin that it will be able to supply Kazakhstan with enough fuel to make up for its on-going shortfall. Kazakhstan is looking for options to make up for the shortfall, which is frustrating ordinary people.
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(News report from Issue No. 207, published on Nov. 5 2014)