NOV. 13 2015 (The Conway Bulletin) – Kazakhstan does not have a complaint against the Karachaganak Petroleum Operating (KPO), which operates the oil and gas field, and does not intend to levy a fine against it, energy minister Vladimir Shkolnik said. His intervention was intended to smack down a report by Bloomberg that the energy ministry was preparing a £2b fine against KPO.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) – Kazakhstan’s economy grew by only 1% in the first 10 months of the year, economy minister Yerbolat Dosayev told a government meeting, far below even the more pessimistic estimates of a year ago. Mr Dosayev said industry had contracted by 2.2%.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 13 2015 (The Conway Bulletin) – Kazakhstan’s trade turnover with member states of the Eurasian Economic Union – that’s Russia, Belarus, Armenia and Kyrgyzstan – has dropped by nearly 26% to $12.1b in the first nine months of this year compared to the same period in 2014, its statistics agency said.
The data is more evidence of the sharp downturn in the region’s economy. It is particularly jarring for Kazakh president Nursultan Nazarbayev who has been one of the main architects and biggest supporters of the Eurasian Economic Union. It was hoped that the trade bloc would stimulate trade but instead, by anchoring outlying economies to Russia, it has hampered it.
A sharp drop in oil prices and Western-imposed sanctions have tipped Russia into a recession and forced its rouble currency to drop in value.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 20 2015 (The Conway Bulletin) — On the stock markets, KAZ Minerals, formerly called Kazakhmys, was one of the biggest movers.
Its share price rose from 80p to 92p — a two-week high, apparently off the back of news that it will restructure some of its costs.
On the Canada stock market, shares in Centerra Gold recovered from a six-month low of 6.95 Canadian dollars after its core asset, the Kumtor gold mine in Kyrgyzstan announced better-than-expected results.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) — Azerbaijan and Kazakhstan are having to brace themselves for a tough 2016. Oil prices are expected to stay low and output is likely to drop too.
Oil exports from Azerbaijan were down by 0.4% in Jan.-Oct. 2015 compared to last year, due to a decline in oil production, according to a source quoted by Reuters, a continuation of steady trend at its major oil field ACG.
BP is under pressure to stem the drop, and has said that it is on target to achieve this. Now an estimate from the US-based Energy
Information Administration appears to back this up. It said Azerbaijan is likely to maintain this year’s average of 870,000 barrels/day, or even more, in the first half of 2016.
But OPEC, a club of oil exporting countries that does not include Azerbaijan, disagrees.
It predicted oil output of 820,000 barrels/day for 2016, a 6% drop compared to 2015.
“Lower prices are likely to accelerate declines in Azerbaijan’s production in 2016 compared to 2015,” OPEC said in a report.
And Kazakhstan is also sending worrying signals.
Yerbolat Dossayev, minister of economy, said the government cut Kazakhstan’s oil output projection for 2015 by 1.5m tonnes to 79m tonnes, a 2.3% fall. OPEC agreed.
“With no new project startups lined up for next year, declining rates are likely to step up in 2016,” it said in its monthly report.
Analysts expect Azerbaijan and Kazakhstan, which cannot influence oil prices, to produce and export at maximum capacity, while cutting down on investment. Earning hard currency from exports is top of the agenda for Central Asia and South Caucasus countries.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) – In what would amount to a major change of Kazakh government policy, President Nursultan Nazarbayev said that he was considering cutting the number of diplomatic missions to save cash to soften the blow of the current economic downturn. Previously, Kazakhstan’s foreign ministry has been opening outposts in South America, Africa and south-east Asia.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 19 2015 (The Conway Bulletin) – A court in the town of Ridder, north- east Kazakhstan, imprisoned an internet blogger for five years for asking users on a popular social media website if they thought the east of the country should split and join Russia.
This is the first time that a new law banning separatist incitement has been used. The law was introduced in 2014 after the civil war in Ukraine broke out.
According to media reports, 26- year-old Igor Sychev, the blogger, has denied allegations that he was fomenting separatist feelings.
But this is an issue that the Kazakh authorities, up to President Nursultan Nazarbayev, are touchy about.
The north and east of Kazakhstan are populated mainly by ethnic Russians.
This population skew was one of the main reasons Mr Nazarbayev relocated his capital to Astana, in the centre of the country, from Almaty in the south in 1997 and he has spent much time re-working the history of the Kazakh state to be as inclusive as possible — without stretching the realms of possibility too much.
Nationalists in Russia have also increased tension by floating the idea of bringing north Kazakhstan into a Greater Russia.
On a trip to Pavlodar in the north of the country last year, though, it was clear to a Bulletin correspondent that for most ethnic Russians living in Kazakhstan, although their cultural centre of gravity may lie to the north in Russia, they still have faith in the Kazakh state.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) – Kazakhstan’s new Central Bank chief Daniyar Akishev said the tenge could fall further if oil drops below $40/barrel. The tenge has lost half its value this year. The price of Brent oil is around $44/barrel.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 13/16 2015 (The Conway Bulletin) — The Russian miner Polymetal upgraded gold reserve estimates at its Kyzyl mine in eastern Kazakhstan and said it had bought a 75% stake in Armenian diamond mine Lichkvaz that it didn’t already own.
Both the reserve upgrade at Kyzyl and the buyout of Lichkvaz will give the mining industries in Armenia and Kazakhstan a major boost.
At the Bakyrchik mine at its Kyzyl project, Polymetal said that a feasibility study had upgraded the size of gold reserves there by 8% to 29.2m tonnes.
Polymetal will run further exploration works until the end of 2016 and expects to reach full output capacity at the mine in 2019. Polymetal said it is ready to invest $328m for the next phase of the project.
Polymetal CEO Vitaly Nesis said in a statement: “With significantly reduced capital expenditure, compelling high-grade reserves and straight- forward execution plan, Kyzyl is set to become a significant free cash flow contributor for Polymetal.”
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 13 2015 (The Conway Bulletin) — The Kyrgyz Central Bank intervened in the currency market, selling around $14m on Friday to halt the fall of the som. It still fell 3% over the week finishing at 72.1/$1.
In Kazakhstan, the tenge was stable at 307/$1, although it reached a record low of 312/$1 on Monday.
The Georgian lari was stable at 240/$1 throughout the week.
In Armenia and Uzbekistan, currencies fell faster than previously. The Armenian dram lost 1% to 480.9/$1 and the Uzbek sum fell by 0.5% to just above 2,700/$1 on the official market. On the Black Market, the US dollar is reportedly selling at 6,200sum.
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(News report from Issue No. 256, published on Nov. 13 2015)