Tag Archives: Kazakhstan

SP to exclude Kashagan from Kazakhstan’s economic forecasts

ALMATY, OCT. 20 2015 (The Conway Bulletin) — Ratings agency Standard & Poor’s said it would exclude Kashagan, Kazakhstan’s biggest oil field, from its Kazakh economic forecasts because its start-up date was unclear.

The news is a setback for NCOC, the consortium developing the Caspian sea field, which includes Eni, Shell, ExxonMobil, Total, CNPC, Inpex and Kazakhstan’s state-owned company Kazmunaigas.

Karen Vartapetov, S&P’s associate director, explained.

“The project has been repeatedly delayed. We are no longer taking this oilfield into account in the rating procedures,” she said.

Operations at Kashagan begun, briefly, in September 2013, eight years behind schedule. Two weeks later a leaky pipe was discovered and operations were stopped.

The delay has been costly for NCOC, adding an estimated $4b to the current $50b cost of the project.

The Kazakh government and NCOC say commercial production at

Kashagan will resume in the second half of 2016. S&P has forecast a start date no earlier than 2018.

Rich with oil and gas reserves, Kashagan was poised to become the gem of Kazakhstan’s resource-based economy. But technical problems and low oil prices have meant this glittering prize has been delayed.

Over the past few years, international oil companies have quit the project. Now S&P’s decision not to include it in Kazakh econ forecasts further undermines its status .

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Kazakhstan’s Eurasian Bank buys rival

OCT. 20 2015 (The Conway Bulletin) — Eurasian Bank, a private lender in Kazakhstan linked to members of the elite, said it had bought a 100% stake in BankPozitiv, a Kazakh subsidiary of a Turkish bank. Michael Eggleton, Eurasia Bank’s CEO said the deal will not exceed $32m. In anticipation of tighter capital requirements and in an effort to cut costs, foreign banks have been selling their assets in Kazakhstan.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Currency: Kazakh tenge, Georgian lari

OCT. 23 2015 (The Conway Bulletin) — Despite all the reassuring declarations coming from Astana and the Central Bank in Almaty, volatility will be a constant for the Kazakh currency over the next months. There is just no getting away from it.

On Wednesday, Kairat Kelimbetov, Kazakhstan’s Central Bank chief, said 277.5 tenge/ $1 is an acceptable rate as long as oil prices float around $50 per barrel. Already on Friday, Brent prices fell to $48 and the tenge followed to 278.2. Over the past fortnight it has lost 1.5% against the US dollar.

Other currencies fared better this week, maintaining their value. The Georgian lari was steady at 2.39/$1 and even the Kyrgyz som had a calm week below 69/$1.

Rumours of devaluation are more worrisome in Uzbekistan, where the sum is officially stable at around 2,663/$1, but the website dollaruz.com said informal rates on the Black Market are hitting over 5,700 sum/$1.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Economic crisis worse than 2008/9, says Kazakh President

OCT. 19 2015, ASTANA (The Conway Bulletin) — In a rare candid assessment of the economic storm battering Central Asia and the South Caucasus, Kazakh President Nursultan Nazarbayev said the outlook for Kazakhstan’s economy was now worse than it had been during the 2007-9 Global Financial Crisis.

Mr Nazarbayev’s comments, made during a meeting with Kazakh PM Karim Massimov and published on the Presidential website, were the most candid so far by one of the region’s leaders.

And any comparison with the dark days of 2007-9, when the economies of Kazakhstan and its neighbours reversed nearly a decade of sharp growth, will hit a nerve.

“Our people must know the current situation, profits at businesses are dropping, income is falling and there is the possibility of job losses,” he said.

“This is a real crisis — more powerful than in 2007-2009.”

In 2006, according to World Bank data, Kazakhstan had been powering along and enjoying GDP growth of over 10%.

This dipped to 9% in 2007 before falling in 2008 to around 3% and in 2009 to just over 1%.

Consumers and mortgage holders defaulted on debt repayments in 2008-9 and Kazakhstan’s government had to buy up bankrupt banks. Although the Kazakh economy has recovered, the experience left deep financial and psychological scars.

And the crash this time has been just as sudden as the 2007-9 Global Financial Crisis.

In 2007-9, sub-prime mortgages in the US started the rout. This time, a sudden fall in oil and commodity prices and a loss of confidence in Emerging Markets, including in China, have been the triggers.

Currencies across Central Asia and the South Caucasus have fallen by around 40%, inflation is rising and trade volumes falling.

Kazakhstan has built up cash reserves from oil and gas sales but Mr Nazarbayev said that, although social programmes would be supported, businesses would not be bailed out.

“Companies should not expect the State to give them the means to survive. This will not happen,” he said.

Other leaders across Central Asia and the South Caucasus may not have been as forthright as Mr Nazarbayev on the economic outlook but they are facing the same stormy conditions.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Kazakh labour figures down

OCT. 19 2015 (The Conway Bulletin) – Over 11,000 people lost their jobs in Kazakhstan in the first nine months of the year, the ministry of social development said. The ministry monitors only a sample of private businesses, so the total numbers could be larger, according to Radio Free Europe. A chart produced by the Economist Intelligence Unit showed that the overall size of the Kazakh labour force is shrinking.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

S&P drops Kazakh Kashagan

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.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Business comment: Opec, Kazakhstan and Azerbaijan

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.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

VimpelCom sells kit in Kazakhstan, Armenia

OCT. 21 2015 (The Conway Bulletin) — Russian telecoms company VimpelCom said it is selling 50,000 phone towers across the former Soviet Union for $5b. VimpelCom, headquartered in the Netherlands, hired several banks to broker the deal. Armenia, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan are among the countries involved in the deal.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Kazakhstan’s space agency enters join venture

OCT. 21 2015 (The Conway Bulletin) — Meyrbek Moldabekov, deputy head of Kazakhstan’s space agency KazCosmos, said it has entered a joint venture with French aircraft manufacturer Airbus to build satellites. Airbus owns 27.5% of the venture and will be jointly responsible for operations at an assembly plant to be built in Kazakhstan by 2017.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Kazakh PM dies from cancer

OCT. 16 2015 (The Conway Bulletin) – Several high-profile personalities attended the funeral in Atyrau, west Kazakhstan, of former Kazakh PM Nurlan Balgimbayev, who died on Oct. 14 aged 67 from cancer. PM Karim Massimov read a message from Pres. Nursultan Nazarbayev.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)