Tag Archives: oil

Georgia is the best route, says Iran

JUNE 28 2016 (The Conway Bulletin) — Iran’s oil refining and distribution company said that it views Georgia as the best route to send its various petroleum products to Europe. Iran and Georgia have developed increasingly close economic and business relations over the past few years and there is now relatively high number of Iranian businesses and nationals living in Tbilisi. They had viewed Georgia as a potential route around sanctions.

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(News report from Issue No. 287, published on July 1 2016)

 

Business comment: Big Projects

JUNE 29 2016 (The Conway Bulletin) – Azerbaijan may resume its dream of building a mega petrochemical processing complex in an effort to revive its oil and gas sector. This alone is good news for the economy of Azerbaijan, which is poised to see its GDP shrink this year for the first time in two decades.

The intent of SOCAR, the state-owned energy company, is to salvage the project, which it had effectively abandoned in February, after its initial investors had either pulled out or stalled financing.

This is the effect of sustained low oil prices. Besides shying away from upstream exploration and production for costly fields, oil and gas companies have also been forced to rethink their plans for downstream processing facilities.

The project initially included an oil refinery, for a total cost of $16.5b. After scrapping parts of the complex, including the refinery, and downsizing the gas processing facility, the project’s price tag fell to around $4b, a cost that Chinese and Russo- Italian ventures, the new potential investors, now deem feasible.

This is a common problem. Big projects have had to face both the doubts of investors in a low oil price era and the protests of locals, who would rather see resources allocated to combating the enduring crisis.

In January, South Korea’s LG pulled out of a project to build a $4.2b petrochemical plant in Kazakhstan, Russia fled an investment to build a $2b hydropower project in Kyrgyzstan, and Azerbaijan seemed to have abandoned hopes for its project.

As oil prices timidly pick up again, Azerbaijan’s announcement that the project might still see the light could potentially lure investors, who had kept themselves at arm’s length from the rather toxic market it had become in the past two years.

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(News report from Issue No. 287, published on July 1 2016)

 

Kazakh oil producer restarts output

ALMATY, JUNE 21 2016 (The Conway Bulletin) — Aral Petroleum Capital, a small oil company owned by Canada’s Caspian Energy, said it had restarted oil production at the East Zhagabulak field in Kazakhstan after cutting output to zero because of the sharp fall in oil prices.

This is good news for the Kazakh oil sector, which has seen production fall from some of its least economical fields and may also indicate that other oil companies who have cut production would follow with price rises.

Aral said it welcomed the Kazakh government’s decision to cut customs duty on oil to $30/tonne from $40/tonne in February.

Michael Nobbs, chairman of Caspian Energy, said its subsidiary will now generate cash flow to boost investment as well as pay back creditors. Mr Nobbs, however, warned that creditors could hinder progress. “If a creditor were to take action to seize or block access to Aral’s bank accounts, Aral’s ability to continue producing would be seriously jeopardized,” Mr Nobbs said in a statement.

Aral operates the Zhagabulak oil field, located in the north-western Aktobe region, near Kenkiyak.

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(News report from Issue No. 286, published on June 24 2016)

 

CNPC and Total start arbitration against Tethys over Tajikistan delays

DUSHANBE, JUNE 20 2016 (The Conway Bulletin) — China’s CNPC and France’s Total have started arbitration proceedings against Tethys Petroleum, a British oil company focused on Central Asia, for failing to make payments to their joint oil project in Tajikistan.

Tension has been rising between Tethys and its partners at the Bokhtar oil field over the perceived slow progress of its development. Earlier this year, the Tajik government said that it would take back the 25% stake in the Bokhtar field that Tethys, CNPC and Total were developing if progress wasn’t speeded up.

Last year Tethys, the lead partner, missed two payments towards the Bokhtar field. Like the rest of the oil industry, Tethys has been hit by the sharp fall in oil prices over the past year. At the start of this year it was forced to patch together a deal with Olisol, a Kazakh oil company.

In a wide-ranging statement that discussed various parts of its business, Tethys said that CNPC and Total had filed their lawsuit against its subsidiary, Kulob Petroleum, at the International Court of Arbitration in Paris in May. Tethys, CNPC and Total each own one-third of the Bokhtar licence.

“The filed arbitration request is in relation to the Notice of Dispute received by Kulob Petroleum on Jan. 8 2016,” it said in a comment on the press release. Neither CNPC nor Total have commented.

The reference to Jan. 8 was to a notice that CNPC and Total filed against Tethys for breaking the terms of production sharing agreement (PSA) at the Bokhtar development.

For Tajikistan, the disagreements and delays to developing the Bokhtar field are a major disappointment. When Tajikistanagreed the deal to develop a 36,000 square km area in 2013, optimism was high that the development would deliver some of the hydrocarbon wealth it has watched neighbouring Turkmenistan and Kazakhstan grow rich off.

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(News report from Issue No. 286, published on June 24 2016)

 

Skyland starts production in Tajikistan

JUNE 19 2016 (The Conway Bulletin) – Australia’s Skyland Petroleum said it started operations at its first well at the Kyzyl-Tumshuk oil and gas field in southern Tajikistan. Skyland has actively operated across Central Asia and the South Caucasus. Skyland said the Kyzyl Tumshuk project was started below budget and will be profitable despite low oil prices.

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(News report from Issue No. 286, published on June 24 2016)

 

Kazakhstan’s Kazmunaigas wants to gain more control of KMG EP

ALMATY, JUNE 17 2016 (The Conway Bulletin) — Kazmunaigas, Kazakhstan’s state-owned energy company, said it wants to change the shareholder’s agreement at its London-listed subsidiary KMG EP, a move that independent directors said would weaken the company.

Kazmunaigas, which owns 57.9% of KMG EP, released a note that called for an extraordinary general meeting in August, that would change the terms in the so-called relationship agreement, a document that was prepared in 2006, when KMG EP listed its global depository receipts in London.

Analysts have said that Kazmunaigas, which has been hit by low oil prices, may be looking to gain more control of KMG EP, which has performed better than its state-owned parent. By securing more shares and improved terms, Kazmunaigas would also strengthen its position ahead of a prospective IPO in the next few years.

But independent directors at KMG EP immediately lined up to voice their concerns about Kazmunaigas’ plans. They also said that they would resign if they were passed.

“[We] strongly recommend that all Independent Shareholders vote against the Resolutions proposed by NC KMG,” three of the four independent directors on the board of KMG EP said in a joint statement.

The directors also said the new document will “significantly weaken” independent voices in the company’s decision-making processes and the Kazmunaigas offer of $7.88/GDR to minority shareholders “significantly undervalues” KMG EP.

Kazmunaigas said a new deal would improve efficiencies at KMG EP.

And the row looks to be getting more bitter. Kazmunaigas chairman Sauat Mynbayev also said the KMG EP share price could fall by one-third to around $5/GDR if investors didn’t go along with the plan.

“I don’t think the stock price will jump, in fact, if the shareholders decide to go against our plan, it could fall to, say $5/share,” he said.

In effect, the government sent a strong signal to shareholders that it wants to increase control over KMG EP.

If shareholders choose to go against the plan, a bitter battle for control looms.

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(News report from Issue No. 286, published on June 24 2016)

 

Stock market: KMG EP

JUNE 23 2016 (The Conway Bulletin) – The price of KMG EP’s global depository receipts (GDRs) in London has not moved much in the past week, despite the dispute between its owner, Kazakhstan’s Kazmunaigas, and its independent directors.

KMG EP is the upstream branch of the Kazakh state-owned oil and gas company. It listed its GDRs in London after an IPO in 2006. The closing price on Thursday was $7.24/GDR, which follows a trend that since mid- May has pushed KMG EP’s GDRs above the $7 benchmark.

Despite low oil prices and decreasing export volumes, KMG EP has managed to perform well in the first quarter of the year, due to the sharp depreciation of the tenge against the US dollar. A weaker tenge helped KMG EP offset domestic costs and increase the value of its exports, denominated in US dollars, despite the plunge in global prices.

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(News report from Issue No. 286, published on June 24 2016)

 

Kazakhstan’s oil output falls

JUNE 13 2016 (The Conway Bulletin) – Kazakhstan’s oil output fell by 7% to 1.5m barrels/day in April compared to the same period in 2015, the Organisation of Petroleum Exporting Countries (OPEC) said in a monthly report. Kazakhstan’s Statistics Committee said total oil production shrank by 2.8% in Jan.-May 2016, to 27.7m tonnes, compared to the same period in 2015.

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(News report from Issue No. 285, published on June 17 2016)

 

Kazakh oil revenues fall

JUNE 15 2016 (The Conway Bulletin) – Kazakh officials said production of oil and gas makes up around 17% of the country’s GDP, a proportion eight percentage points lower than in 2015. The fall in oil prices has impacted both feasibility and profitability at Kazakhstan’s oil and gas fields. This is an important measure of the impact of the drop in oil price on Kazakhstan’s economy.

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(News report from Issue No. 285, published on June 17 2016)

 

Stock market: Tethys, Nostrum

JUNE 17 2016 (The Conway Bulletin) – Central Asia and South Caucasus-linked stocks fell this week, driven down by lower oil prices. As shown in the table, Tethys and Nostrum shares dropped significantly over the past week after a rather stable month.

Roxi, on the other hand, moved against the tide, gaining 15.3% in one week.

On June 14, the company’s non-executive director Edmund Limerick purchased 500,000 shares at 9.8p/share, for a total of £49,000. Mr Limerick and his wife now own 1.15m shares, or 0.12% of the company, up from 0.07% before the purchase.

The deal pushed up the share price, giving it a boost after weeks of downward pressure.

Kuat Oraziman, CEO, and Kairat Satylganov,CFO and director, own Roxi, which operates in Western Kazakhstan, not far from the massive Tengiz oilfield.

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Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 285, published on June 17 2016)