NOV. 25 2015 (The Conway Bulletin) — Canada-based Tethys Petroleum extended an exclusivity period by 14 days for Kazakhstan’s Olisol to submit final details of its $35m buyout offer to Dec. 7. Tethys has also now appointed Alexander Abramov and William Wells to its board meeting, a pre-condition of the offer.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
DEC. 3 2015 (The Conway Bulletin) – Russia is piling pressure on its partners in the Eurasian Economic Union (EEU) to join it in blocking Turkish trade across the region, a move that could fracture regional alliances.
After a Turkish fighter-jet shot down a Russian fighter-jet over Syria last month, Russian President Vladimir Putin promised revenge. This included a ban on Turkish exports to Russia.
To tighten the ban, Mr Putin needs his allies in the EEU — Armenia, Belarus, Kyrgyzstan and Kazakhstan — to stop Turkish goods transiting through their territories into Russia. But it’s a clarion call which is likely to prove divisive for Central Asia and the South Caucasus where Turkey has strong cultural, trade and diplomatic links.
Of the EEU members, Belarus is a natural ally of Russia and will support Moscow. As will Armenia, which has strained relations with Turkey.
For Kazakhstan and Kyrgyzstan the issue is more complicated. They have good relations with both Turkey and Russia and will likely try to appease both sides as Kazakh foreign minister Yerlan Idrissov has said.
“Emotions are running high, but my president, knowing Mr Putin very well personally and knowing his great potential to be constructive and knowing personally (Turkish) President Erdogan, believes and hopes they will think strategically in this very difficult situation,” he told Reuters in an interview.
Outside the EEU, Turkey is likely to find more supporters. Turkmenistan sees Turkey as a natural ally and has been building up a rapport with Ankara while its relations with Moscow have worsened. It wants to pump gas to Europe and this means crossingTurkey.
With its 2008 war with Russia still fresh in the memories, Georgia naturally leans towards Turkey.
Azerbaijan, though, is Turkey’s biggest ally in the region. The countries are close culturally, politically and economically. Their militaries also often train together.
Although relations with Russia have improved over the past couple of years, it didn’t take long for Azerbaijan to rally to Turkey’s cause.
Azerbaijan cut by 20% cargo tariffs for Turkish trucks travelling from Baku across the Caspian to Kazakhstan and Turkmenistan, a move that will irritate the Kremlin and exacerbate regional tension.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 259, published on Dec. 4 2015)
NOV. 27 2015 (The Conway Bulletin) — Oil producers suffered in the London stock market this week, due to mixed industrial announcements.
Tethys Petroleum shares lost 13% in one week closing at 4.25p on Friday. Nostrum Oil & Gas was on track to a similar fall after it lost 9% on Monday, recovering later in the week after it showed its investment plans for a new gas treatment facility. On Friday, Nostrum closed at 376p, down 3.5%. Roxi Petroleum shares closed at 7.75p on Friday, down 5% from last week.
Central Asia Metals lost 2.2% this week to close at 161.5p on Friday, while the other major miner in Kazakhstan, KAZ Minerals, gained 7.8% to 99.8p.
Newly-listed Georgia Healthcare Group lost around 2% this week to close at 177p on Friday.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 27 2015 (The Conway Bulletin) — The only currency that moved substantially this week was the Kyrgyz som, which lost 2.3%, closing at 74/$1 on Friday.
The Kyrgyz Central Bank intervened heavily this week to prop up its currency, which looked like it was losing traction and could have spiralled downwards. During the day on Nov. 26, the exchange rate had surged to 77-79 som/dollar, which prompted the Central Bank to sell $7m in the currency market and enabled the currency to recover somewhat and move back to 74/$1.
Tolkunbek Abdygulov, the Central Bank chief, said this week the exchange rate was influenced by speculators.
All other currencies were stable.
In the South Caucasus, the Georgian lari maintained its level of 2.40/$1 and the Armenian dram was also stable at 480.8/$1.
In Central Asia, the Kazakh tenge floated at around 307/$1 throughout
the week. The Tajik somoni continued its gentle depreciation, and now trades at 6.7/$1.
The dollaruz.com website which monitored the Black Market rate for the Uzbek sum, appears to have closed.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 26 2015 (The Conway Bulletin) — Tengizchevroil (TCO), the consortium producing oil at the Tengiz field near Atyrau in west Kazakhstan, has stopped oil shipments via tanker from the Caspian port of Aktau because of high Eurasian Economic Union (EEU) export tariffs, a port official told Astana TV.
TCO declined to deny the story. Instead it confirmed that it was now exporting more of its oil through the CPC pipeline which pumps oil from Tengiz around the top of the Caspian Sea to Novorossiysk in Russia.
In an interview with Astana TV, a channel owned by the ruling Nur Otan party, Marat Ormanov, director at KazMorTransFlot, the shipping subsidiary of Kazmunaigas, said TCO shipment for crude oil had dropped to zero.
“TCO left in July, re-routing its entire output through the Caspian Pipeline Consortium. Other companies have followed suit and now there is almost no one left in Aktau,” Mr Ormanov said.
A news reporter for Astana TV then quoted him as saying that part of the reason that TCO had quit the Caspian Sea route was because of increased export tariffs imposed by the EEU. The EEU is the Kremlin-led trade bloc that includes Kazakhstan, Belarus, Kyrgyzstan and Armenia.
In December 2013, tankers shipped over 77,000 tonnes of oil every week from Aktau across the Caspian Sea. This year, KazMorTransFlot had planned to send a similar amount to both Makhachkala and Baku. Oil production in Kazakhstan has dropped off this year because of a slump in prices. Companies have also been looking for cheaper ways to export it.
This has coincided with the introduction of EEU rules and tariffs which many businesses have complained add a layer of bureaucracy and complicate business.
The Tengiz field is important to Kazakhstan. It is its biggest and, arguably, most successful oil project. The partners in the project are Chevron, ExxonMobil, Kazmunaigas and LukArco.
In response to the Astana TV interview, TCO told The Bulletin that it was moving away from exporting oil via Aktau.
“TCO has maximised transportation through the Caspian Pipeline Consortium system so as to take advantage of this more cost-effective route,” said Yerlan Kassym, public affairs adviser.
“As a result, transportation through other routes, including the more expensive southern route via the Aktau port, have been minimised.”
TCO declined to comment on EEU tariffs and duties. The Caspian Pipeline Consortium (CPC) is exempt from EEU tariffs because it is classified as an international pipeline.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 25 2015 (The Conway Bulletin) — Chinese Doublestar Tire will build a $110m tyre plant in the city of Oksemen (Ust-Kamenogorsk) in north-east Kazakhstan. Local company Kazindustriservis will be Doublestar’s partner and will own 72.5% of the joint venture. The plant will become Doublestar’s manufacturing hub for exports to other former Soviet Union countries.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 23 2015 (The Conway Bulletin) – Kazakhstan’s parliament approved a budget designed to both limit spending during a period of low oil prices and target a national deficit that has crept up to a 10-year-high.
Perhaps with this in mind, the sovereign wealth fund Samruk-Ka- zyna announced plans to cap pay and close 33 of its 36 overseas offices and the Central Bank said that it would slow work on building a state-of-the- art data centre in Astana.
The government’s budget for 2016-18 acknowledged that economic growth had stalled and would measure only 1.2% this year, its lowest rate since 2009 — the height of the Global Financial Crisis.
It also specifically wanted to target a deficit which has grown to around 3% of GDP, its highest in the past decade.
Presenting the government’s budget, PM Karim Massimov acknowledged the severity of the economic challenge.
“On December 8, the government will adopt an anti-crisis programme for the next three years. We will unite all previous economic programmes under a new umbrella,” Mr Massimov told the Senate.
President Nursultan Nazarbayev later confirmed he will address the nation on Nov. 30 on plans to tackle to the growing economic malaise.
The new budget forecasts oil prices to remain within the $40- 50/barrel range and the tenge to remain stable at around 300/$1.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 20 2015 (The Conway Bulletin) — KMG International, a subsidiary of Kazakhstan’s state-owned energy company Kazmunaigas, will invest $6m in the modernisation of the Petromidia Navodari refinery in Romania. KMG International owns Rompetrol. The Petromidia refinery has a capacity of 5m tonnes/year and is located just north of Constanta, Romania’s main Black Sea port. The upgrade will be completed by 2018.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 27 2015 (The Conway Bulletin) — Central Banks in the South Caucasus and Central Asia have had a rough year. Keeping up with the strengthening dollar and the falling rouble while monitoring inflation has been a tough test.
In an attempt to stick together during the economic downturn, some of the central bankers appear to have decided to use old infrastructure to continue their meetings and coordinate policies.
Confusion, however, clouds the various structures that are still in place.
The new body which met in Almaty this week was renamed the Eurasian Council of Central Bank Chiefs and is a spin-off of the now- defunct Eurasian Economic Community (EurAsEC).
It doesn’t overlap with the Eurasian Economic Union (EEU) because Armenia is not in it and is no longer representative of the old EurAsEC, which officially closed down last year, as Uzbekistan is not a member.
And this says a lot about just how confusing economic integration has been in the region.
Since the EurAsEC was disbanded, the Eurasian Economic Union (EEU) has become the integrationist body. Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia are part of the EEU.
So why brand it as EurAsEC? Why is Armenia out of the picture?
“Pressing economic questions” are the rationale behind this new body, according to Kazakhstan’s Central Bank.
The countries that form the new body are all in the midst of an economic crisis, but so are other countries that were not invited to the Eurasian banking council.
With the EEU in place and Tajikistan lined up to become a member, the decision to revive such a strange body, rather than another, is difficult to understand.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 15 2015 (The Conway Bulletin) – Looking to boost finances, Kazakhstan said that it would launch its first sovereign Islamic bond, a sukuk, next year. Last week a source at the Central Bank said that Kazakhstan would probably aim to raise $1b through the sukuk. In 2012, the state-owned Kazakhstan Development Bank issued a $73m sukuk.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 257, published on Nov. 20 2015)