Tag Archives: Kazakhstan

Kazakh President’s nephew quits Nur Otan

DEC. 19 2015 (The Conway Bulletin) – Kairat Satybaldy, the 45-year-old nephew of Kazakh President Nursultan Nazarbayev, quit as secretary of the Nur Otan party, one of the most high profile and influential political jobs in the country. Nur Otan is Mr Nazarbayev’s political party. Mr Satybaldy had been secretary of Nur Otan for six years. Some analysts have said he is a potential successor to Mr Nazarbayev.

ENDS

(News report from Issue No. 262, published on Jan. 8 2016)

Lukoil says sanctions hit exploration in Kazakh section of Caspian Sea

ALMATY, JAN. 3 2016 (The Conway Bulletin) — Russian energy company Lukoil said Western sanctions have damaged its ability to carry out exploration work in the Kazakh section of the Caspian Sea, just as Kazakhstan’s government said it wanted to intensify the search for oil and gas.

Amid an ongoing economic downturn, Kazakhstan’s state-owned energy company Kazmunaigas is looking to boost revenues through new oil and gas projects. In the northern section of the Caspian Sea, Russia’s Rosneft and Lukoil are its main partners.

But Lukoil said Western sanctions had hit its operations.

“We don’t have free available drilling rigs and we cannot import them because of Western sanctions,” Vagit Alekperov, Lukoil’s CEO told Russia-24 in an interview.

Kazakh-Russian consortia explored several fields for oil and gas in the early 2000s but failed to make any major discoveries. Although there were some promising indications that fields held decent reserves, most of the projects were suspended as costs mounted.

ENDS

(News report from Issue No. 262, published on Jan. 8 2016)

Business comment: 2015: The year of currency woes

JAN. 7 2016 (The Conway Bulletin) — After Azerbaijan abandoned its currency peg to the US dollar, leading to a second sharp depreciation of the manat in 10 months, confidence in South Caucasus and Central Asian currencies reached a new low.

2015 was a tough year, which began with Turkmenistan slashing 19% off the value of its manat currency on Jan. 1, hinting that oil and gas exporting countries were facing bad times.

The following February, Azerbaijan devalued its currency and later in August Kazakhstan stopped pegging the tenge to the US

dollar, a decision that triggered a sharp depreciation. But although this trend is closely linked to the fall in oil prices since the summer of 2014, that’s not the whole story.

After the rouble collapsed at the end of 2014, it was only a matter of time for countries that enjoyed high trade volumes with Russia. They had to follow suit and devalue their currencies to remain competitive.

In addition, devaluing and unpegging a currency may also serve as a way to give stability to the domestic budget.

Kazakhstan’s Central Banker Daniyar Akishev said the tenge will follow the price of oil. That way energy-exporting firms will have a chance of balancing their books.

But countries with unpegged currencies need to keep an eye on speculation. Azerbaijan now requires a valid ID for currency exchange of more than $500 in value. Tajikistan put in place limits to ATM withdrawals of $400 and could reduce the number of licences for exchange points.

And interventions are unlikely to cease. Kyrgyzstan and Georgia’s Central Banks have already marked the first week of 2016 with purchases in the currency market.

ENDS

(News report from Issue No. 262, published on Jan. 8 2016)

Kazakhstan’s parliament agrees $1b loan

DEC. 23 2015 (The Conway Bulletin) – Kazakhstan’s parliament ratified a deal to take a $1b loan from the Asian Development Bank to plug a gap in the government’s finances. The deal was agreed in November. The sharp fall in oil prices has hit Kazakhstan’s economy hard shrinking growth rates and government revenues.

ENDS

(News report from Issue No. 262, published on Jan. 8 2016)

Kazakh businessman ups Kazkom stake

DEC. 29 2016 (The Conway Bulletin) — Kenes Rakishev, son-in-law of Kazakh defence minister Imangali Tasmagambetov, became the majority shareholder in Kazakhstan’s largest bank, Kazkommertsbank, after he completed his purchase of investment group Alnair Capital Holding, media reported. Mr Rakishev will now own, directly and through Alnair, 56.75% of Kazkommertsbank. Alnair had been linked to the Kazakh elite.

ENDS

(News report from Issue No. 262, published on Jan. 8 2016)

Kazakh tenge drops to fresh lows

DEC. 18 2015 (The Conway Bulletin) – The Kazakh tenge fell to its record low against the dollar this week, after the US Federal Reserve decided to raise interest rates by a quarter of a percentage point, a move that will inevitably dent Kazakhstan’s fragile economy.

On the eve of the celebrations for the 24th anniversary of Kazakhstan’s independence, the tenge had already bottomed out at 337.8/$1 (Dec. 15). When trading re-started after two days of holidaying in Kazakhstan and an interest rate rise in the US, the tenge fell another 1.4% to hit 342.5/$1.

The tenge now trades at half its value in August, before the Central Bank ditched the Tenge-US dollar peg.

The Fed’s rate rise decision on Dec. 16 was expected, but it was still bad news for Emerging Markets.

And Kazakh state-owned companies seemtobeplanningforworsetocome.

An alleged official letter sent out by state-owned energy company Kaz- munaigas and leaked on social media, instructed its subsidiaries to draft plans for the period 2016-2020 accounting for oil prices at $30/barrel and a tenge/dollar rate of 360 (Dec. 14). Brent oil is currently trading at $36.70/barrel.

Kazmunaigas could not be reached for comment.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Kazakh TransGas names new CEO

DEC. 11 2015 (The Conway Bulletin) – KazTransGas, Kazakhstan’s gas distributor, named Rustam Suleymanov as its new CEO. Mr Suleymanov has worked at KazTransGas for 15 years. Former CEO Kairat Sharipbayev was named chairman of the board.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Stock market: Tethys, Nostrum, Tengri

DEC. 17 2015 (The Conway Bulletin) — Commodities prices keep declining and the industry continues to worry and use caution. This is reflected in the markets, which show the poor performance of Central Asia and South Caucasus focused firms.

Tethys Petroleum (-6% in the past week), Nostrum Oil & Gas (-5.8%) and Roxi Petroleum (-4%) were hit by oil prices plummeting to around $37/barrel.

Industrial and judicial news affected the performance of several miners in the region.

KAZ Minerals closed at 88.5p on Thursday a 7.7% fall in share prices compared to last week. Centerra Gold lost 11% on the Toronto Stock Exchange, closing at 7.07 Canadian dollars on Thursday.

Generally stable Tengri Resources also fell after it announced it was not going to mine the Taldybulak gold and copper project in Kyrgyzstan. It lost 17.4% in one day to close at 3p per share on Thursday.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Business comment: Kazakhstan’s Oil Production

DEC. 20 2015 (The Conway Bulletin) — He must thinks we’re fools.

“We did all we could to keep oil prices high by cutting oil production domestically, now it’s time for other countries to do the same,” Kazakhstan’s minister of energy Vladimir Shkolnik told the press in Astana.

He attributed this year’s 1.5m tonnes production cut in Kazakhstan’s oil output to a deliberate decision to help keep oil out of the market to try to raise prices. If this was the intention, it clearly hasn’t worked, because prices are down to a seven-year low, at around $37/barrel.

But, incidentally, this was not the intention.

As several experts have told the Bulletin throughout the year, Kazakhstan only produces around 2% of the world’s total oil output and does not have a seat at price- setting assemblies such as OPEC.

This makes it a price taker, one that cannot, even by freezing completely oil exports, bring back oil prices above $100/barrel.

A 1.5m tonne cut represents roughly a 2% cut in Kazakhstan’s yearly production and is entirely attributable to aging oil fields and delays in the start of new projects.

The re-start of production at the Kashagan oil field in the Caspian Sea is now looming on the horizon, but at the ministry of energy its production forecast is lower than previously assessed.

Tengizchevroil, the consortium operating Kazakhstan’s largest field, finally said it would go ahead with its expansion project in H1 2016, two years behind schedule and with a $15b cost overrun.

So please, Mr Shkolnik, don’t say you cut production on purpose. The main reason that Kazakh output has dropped is because low oil prices have discouraged production.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

China buys controlling stake in major Kazmunaigas subsidiary

DEC. 15 2015 (The Conway Bulletin) — China’s CEFC energy company will buy a controlling stake in KMG Inter- national, a subsidiary of Kazmunaigas, in a deal that helps Kazakhstan raise cash but also rids Western investors of one of the more interesting companies previously offered up by Kazakh officials as a potential IPO target.

The deal, which will give CEFC a 51% share in the Netherlands-based company, is valued at between $500m and $1b, sources told Reuters.

KMG International, formerly called Rompetrol, owns the Petromidia Navodari refinery and hundreds of petrol stations in Romania, Georgia, Bulgaria and Moldova.

It is affiliated with Switzerland- based KMG Trading, which secured a $3b deal in December with Vitol as the buyer of future oil shipments from Kazmunaigas’ 20% share of the Tengizchevroil consortium.

Neither KMG International nor KMG Trading could be reached for comment.

Kazmunaigas has unsuccessfully tried to sell off Rompetrol-owned assets over the past few years.

Samruk-Kazyna, Kazakhstan’s sovereign wealth fund which owns Kazmunaigas, had said it wanted to sell KMG International in a round of privatisation set for 2016. Now, the privatisation of KMG International seems to have fallen out of this IPO bucket list.

Kazakhstan has said it wants to sell off state-owned companies involved in midstream and downstream operations in an effort to raise much-needed cash to restore financial stability during what has become a sustained downturn in oil prices.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)