Tag Archives: oil

Azerbaijan’s energy company reorganises its assets in Turkey

JUNE 1 2016 (The Conway Bulletin) — SOCAR Turkey Enerji, a subsidiary of Azerbaijan’s state-owned energy company, has said it wants to buy stakes in a pipeline and a lubricants company and sell a stake in a refinery, in a major shake up of its operations in Turkey.

SOCAR Turkey Enerji said it is interested in buying OMV Petrol Ofisi, a subsidiary of the Austrian energy company that produces fuel and lubricants in Turkey. To secure the deal, the Azerbaijani company will have to beat competition from Chinese and Japanese companies.

“SOCAR has an interest in this deal. We are waiting for the company to submit information on these assets,” Zaur Gakhramanov, the company’s head, told local media. He also said his company wants to buy a 7% stake in TANAP, the Trans-Anatolian gas pipeline, from SOCAR, which owns a 58% stake in the project.

Perhaps adding to the company’s expansion plans, Mr Gakhramanov also said that SOCAR Turkey Enerji plans an IPO in 2020 for 49% of its shares. He did not say where the company’s shares would list.

But this year SOCAR Turkey Enerji has also looked to sell.

In May, it said it wanted to sell off its shares in Turkey’s petrochemical complex Petkim. In March SOCAR Turkey Enerji cut its share in Petkim from 8.07% to 5.32%. SOCAR Turkey Petrokimiya, another SOCAR subsidiary, still owns 51% of the project.

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(News report from Issue No. 283, published on June 3 2016)

Kazakhstan wants better Karachaganak deal

ALMATY, JUNE 2 2016 (The Conway Bulletin) — The Kazakh government has rejected a $300m settlement for a $1.6b fine it levied at the consortium of companies developing Karachaganak, the FT reported quoting Kanat Bozumbayev, Kazakhstan’s energy minister, fuelling speculation it may want to leverage a bigger stake in the project.

Mr Bozumbayev said the government had dismissed a settlement offer from the consortium.

“It has already returned the investment shareholders made, and now it will give Kazakhstan profits, so we are negotiating,” Mr Bozumbayev said.

This week, Bloomberg quoted unnamed sources as saying that Kazakhstan is seeking to increase its share in the consortium, led by Eni (29.25% stake), Shell (29.25% through BG), Chevron (18%), Lukoil (13.5%) and state-owned Kazmunaigas (10%).

Kazmunaigas gained its 10% stake in Karachaganak in 2011 after settling a lawsuit against the consortium for tax evasion and environmental damage.

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(News report from Issue No. 283, published on June 3 2016)

Russia to ship oil to China, via Kazakhstan

MAY 30 2016 (The Conway Bulletin) — Nurtas Shmanov, head of Kazakhstan’s pipeline operator KazTransOil, said the company is ready to increase shipments of Russian oil to China via a Kazakh pipeline from 7m to 10m tonnes/year. Mr Shmanov said the pipeline wouldn’t need to be expanded to carry out the operation, effectively hinting that Kazakhstan could downsize its own oil exports to China.

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(News report from Issue No. 283, published on June 3 2016)

Kazakhstan’s oil pipeline company grows by 2%

MAY 30 2016 (The Conway Bulletin) — Revenues for KazTransOil, Kazakhstan’s state-owned oil pipeline company, grew by 2% to 54.7b tenge ($164m) in Q1 2016, compared to the same period last year. As capital expenditures almost halved to 6.6b tenge ($20m), analysts remain confident that the company will benefit from the depreciation of the tenge in Q4 2015 and also from rising oil prices.

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(News report from Issue No. 283, published on June 3 2016)

Litigation case will not affect sale, says Kazakh energy company

MAY 30 2016 (The Conway Bulletin) — Kazmunaigas, Kazakhstan’s state- owned energy company, said that a litigation case in Romania involving one of its subsidiaries will not affect the sale of the unit to China’s CEFC. Last December, CEFC agreed to buy a 51% stake in KMG International, formerly Rompetrol. Romanian prosecutors seized KMG International’s refinery earlier in May during an investigation into its privatisation and subsequent sale to to Kazmunaigas.

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(News report from Issue No. 283, published on June 3 2016)

Azerbaijan’s energy company to make agreement with India

MAY 30 2016 (The Conway Bulletin) — India’s state-owned ONGC Videsh said it had entered into a preliminary agreement with SOCAR Trading, the Geneva-based branch of Azerbaijan’s state-owned energy company SOCAR, to jointly sell oil it produces in Azerbaijan. Since 2013, ONGC Videsh has owned a 2.7% stake in the Azeri Chirag-Guneshli offshore oil project in Azerbaijan.

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(News report from Issue No. 283, published on June 3 2016)

SOCAR’s finances falter

JUNE 3 2016 (The Conway Bulletin) — In 2016, Azerbaijan found itself in the midst of a crisis that it had tried to ignore for months. Low oil prices hit both revenues and investment opportunities for SOCAR, the state-owned energy company.

It is now trying to cut expenditures and raise cash through bonds and loans for its main projects. In Turkey, SOCAR’s subsidiary is divesting from a large petrochemical complex and readying for an IPO, in an effort to go full-steam into the Southern Gas Corridor business.

And Turkey is a key partner in the pipeline game, as it will become the gateway for Azerbaijani gas to Europe.

Now, though, SOCAR faces a problem. It can either diversify its portfolio, cut investments and wait for sunnier days or go ahead and pour cash — borrowed cash — into the US and Europe’s pet pipeline project.

Little does it matter that US President Barack Obama and British PM David Cameron both sent kind words to Azerbaijan’s international energy conference this week. SOCAR still has a problem.

But if it invests disproportionately into infrastructure, it might not have enough to ensure that production upstream is steady enough to fill the pipelines, which would be a repeat, though a much faster one, of the fate of the BTC oil pipeline, now constantly used below capacity.

The incessant movements, even marginal, in foreign markets in the past few months reveal how shaky SOCAR’s position is. Last week it closed representative offices in three countries to save money. But that won’t be enough to pay back the gamble it has taken with all the outstanding loans and bonds to build the West’s dream pipeline.

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(News report from Issue No. 283, published on June 3 2016)

Azerbaijan’s oil company cuts costs

MAY 25 2016 (The Conway Bulletin) — Azerbaijan’s state-owned oil company SOCAR said it had closed three of its representative offices abroad, in an attempt to cut costs during a period of sustained low oil prices. Rovnag Abdullayev, SOCAR’s CEO said the company shut offices in Switzerland, Belgium and Germany. Importantly, these are just the representative offices, the offices of SOCAR’s subsidiaries will remain open. SOCAR is one of Azerbaijan’s biggest brands. For it to close offices means that the government is feeling the pinch economically.

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(News report from Issue No. 282, published on May 27 2016)

Editorial: SOCAR’s moves

MAY 27 2016 (The Conway Bulletin) — It’s not yet clear whether SOCAR is now more downbeat or down-to-earth. The Azerbaijani state oil company has closed representative offices in three countries this week and is selling a stake in a petrochemical complex in Turkey. Cost-cutting, it seems, is high on the agenda as sustained low oil prices have hit revenues and hindered production growth.

But this week SOCAR has shown its bullish side as well. As we report in the Business News BP and SOCAR signed an agreement to jointly develop an offshore oil field. SOCAR also committed to building a new refinery in Georgia, a hub for Azerbaijani oil destined for customers in the West.

On the markets there is no sign that global oil prices, which nudged above $50/barrel for the first time this year on May 26, will shoot up again anytime soon.

SOCAR’s conservative approach to lavish spending on shiny offices around the world and its bullish plans for exploration and refining show that the company believes that the worst times are over, or nearly over, and it’s now time to look forward.

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(News report from Issue No. 282, published on May 27 2016)

Azerbaijan’s oil company sells Petkim shares

MAY 21 2016 (The Conway Bulletin) — SOCAR, Azerbaijan’s state oil company, said one of its Turkish subsid- iaries wants to sell its 5.32% stake in the Turkish oil and chemical complex Petkim for 70.9m lira ($33m) according to Bloomberg. In March, Socar Turkey Enerji reduced its ownership in Petkim from 8.07% to 5.32%. SOCAR Turkey Petrokimya still owns a 51% stake in Petkim.

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(News report from Issue No. 282, published on May 27 2016)