OCT. 10 2014 (The Conway Bulletin) – Replacing the pipes running from the Kashagan oil site in the Kazakh sector of the Caspian Sea to the mainland could cost up to $3.6b, Reuters reported quoting an energy ministry document. Kashagan is already the world’s most expensive oil project. Production has been delayed because of leaky gas pipes.
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(News report from Issue No. 204, published on Oct. 15 2014)
OCT. 7 2014 (The Conway Bulletin) – Almaty is talking up its chances of hosting the Winter Olympic Games in 2022. A spokesman for the country’s sovereign wealth fund Samruk- Kazyna, which is promoting the bid, said it was almost certain to win the Games after Oslo dropped out. Beijing is the other candidate city.
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(News report from Issue No. 204, published on Oct. 15 2014)
OCT. 14 2014 (The Conway Bulletin) – Ratings agency Standard & Poors placed Kazkommertzbank, one of the biggest banks in Kazakhstan, on a negative ratings watch because of its purchase of BTA Bank. BTA Bank was bought from the government in what analysts have said was a political, rather than business, move. BTA Bank owned a large amount of bad debt.
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(News report from Issue No. 204, published on Oct. 15 2014)
OCT. 8 2014 (The Conway Bulletin) – The Kazakh government said it would restructure Kazakhstan’s sovereign wealth fund Samruk-Kazyna in order to generate $11.2b in sales and savings.
Costs will be cut and unwanted assets sold off through the much vaunted, but still-to-emerge, People’s IPO.
The government wants to half the number of companies administered by the fund and sell up to 10% in selected strategic national companies such as electric grid operator KEGOC, energy holding Samruk-Energo, railroad major Kazakhstan Temir Zholy, and the national nuclear agency KazAtomProm.
Samruk-Kazyna is the main tool through which the Kazakh government controls companies. The fund accounts for 10.5% of Kazakhstan’s GDP and its assets are valued at $100b.
The timing of such a large restructuring is important. Economic growth rates across the region have been halved over the past few months as Russia’s sanction-hit economy tips into recession.
It may just have been time to for the Kazakh government to get serious about cutting costs and raising revenue.
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(News report from Issue No. 204, published on Oct. 15 2014)
OCT. 9 2014 (The Conway Bulletin) – Kazakh economy minister Yerbolat Dossayev refuted speculation the Central Bank was planning to devalue the tenge again this year, media reported. Kazakhstan’s economy has stalled since sanctions started to bite Russia. Kazakhstan has already devalued its currency by 20%.
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(News report from Issue No. 204, published on Oct. 15 2014)
OCT. 7 2014 (The Conway Bulletin) – The Kazakh government has backed a plan to expand the Tengizchevroil oil project in the west of the country despite cost estimates running higher than expected, Reuters reported. Tengizchevroil, led by Chevron, is one of Kazakhstan’s most successful oil projects.
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(News report from Issue No. 203, published on Oct. 8 2014)
OCT. 7 2014 (The Conway Bulletin) – France is investigating alleged kickbacks during deals between French and Kazakh companies four years ago, the AFP news agency reported quoting a judge on condition of anonymity. The judge said the case was opened in March 2013 and that three people have been charged. The case will be an embarrassment to Kazakhstan.
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(News report from Issue No. 203, published on Oct. 8 2014)
BISHKEK/Kyrgyzstan, OCT. 8 2014 (The Conway Bulletin) — Ashraf Ghani, Afghanistan’s new president is on a mission to transform his war-torn country with a shredded economy into a regional force. If he is successful, Central Asia may find in its southern neighbour a strong trading partner and occasional rival rather than the Taliban-tainted bogeyman regional governments have traditionally portrayed it as.
Central Asia’s security-first approach to Afghanistan is understandable. Both Tajikistan and Uzbekistan have had to deal with Islamic extremists linked to the Taliban and other Afghan militants. Neutral Turkmenistan is also taking a newly assertive stance towards events in Afghanistan. Turkmen forces were reported as entering Afghan territory to beat back Taliban that had settled on the two countries’ border (Sept 17).
But Central Asia’s economic ties to Afghanistan are expanding. The long-stalled Turkmenistan- Afghanistan-Tajikistan rail link, which will eventually connect the country to China, looks increasingly likely to happen, while Turkmen gas may one day transit Afghanistan on its way to China.
Mr Ghani is keen to see Afghanistan as a player. His stated ambition to turn the country into an exporter of electricity may make Kabul a rival to both Tajikistan and Kyrgyzstan. The revival of Afghan agriculture may put pressure on scarce regional energy resources.
It is perhaps noteworthy that upon receiving notes of congratulations from all five Central Asian presidents following his inauguration, Mr Ghani’s warmest words were for Kazakhstan and Nursultan Nazarbayev (Sept.29). “Kazakhstan is an important friend and positive example,” he told Kazakh foreign minister Erlan Idrissov at his inauguration.
If Mr Ghani can take Afghanistan on a similar journey, then the country will be ready to both compete and cooperate with Central Asia.
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(News report from Issue No. 203, published on Oct. 8 2014)
OCT. 6 2014 (The Conway Bulletin) – Kazakhstan issued its first US-dollar sovereign debt since 2000 to finance state investments and contain a growing budget deficit.
The government hired Citibank, HSBC and JP Morgan to arrange the deal, which attracted large demand from investors, who purchased $2.5b in 10- and 30-year fixed- income securities.
After a year of significant changes in the banking sector and a 20% currency devaluation, Kazakhstan is not the safest country for financial speculation but analysts talked up the country’s strengths.
“The ministry of finance raised a similar sum in the local market last year, but this time the operation was denominated in dollars which attracted investors in a market hungry for yields,” Sabina Amangeldi, senior analyst at Halyk Finance in Almaty, told the Conway Bulletin.
“The position of the government is reassuring since the country has a net creditor position. The compliance with ICMA’s (nternational Capital Market Association) test clauses demonstrated Kazakhstan’s good will with respect with the global investment community.”
Kazakhstan seems to have seized perhaps the last moment to issue sovereign debt coupons, since the policy of tapering and a possible raise of the current minimal interest rates by the US Treasury in Washington would see US dollars move from emerging markets and back to the United States.
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(News report from Issue No. 203, published on Oct. 8 2014)
OCT. 3 2014 (The Conway Bulletin) – Media reports suggested that Kazakhstan’s headline oil producing project, the Kashagan site in the Caspian Sea, will not start production until 2017. Kazakh officials have said that they expect the project to start production in 2016 but unnamed insiders have said this is unlikely.
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(News report from Issue No. 203, published on Oct. 8 2014)