Tag Archives: oil

IMF flies to Azerbaijan for talks on $4b loan

JAN. 27 2016, BAKU (The Conway Bulletin) — An IMF delegation flew to Baku for meetings with Azerbaijan’s government over a potential loan to buffer it against a financial storm that now threatens to seriously damage its economy.

The FT newspaper reported that the the loan could hit $4b, although an IMF statement later dodged giving specific numbers.

“An IMF team will be in Baku during Jan. 28 – Feb. 4 for a fact- finding staff visit at the authorities’ request. The team will discuss areas for technical assistance and assess possible financing needs,” it said in a statement.

Azerbaijan’s finance minister, Samir Sharifov, though, played down reports of a loan.

He instead said that Azerbaijan was going to raise $2b by selling debt for the Southern Caucasus Gas Corridor Company, which manages various pipelines, and pipeline projects, running from the Caspian Sea to Europe.

“There is no urgent need for a loan, but we can raise loans to support the economy amid low oil prices,” Mr Sharifov told journalists in Baku of talks with the IMF.

If Azerbaijan did take an IMF loan it would be the first emergency loan given to a sovereign state during this current financial downturn. Taking an IMF loan would also dent Azerbaijan’s pride. Fuelled by high oil prices its economy has boomed over the past 15 years. The government has invested heavily in promoting its reputation as a bridge between the East and West, building grandiose towers and sponsoring major sports events.

But the government has failed to shift Azerbaijan from a petro-econ- omy to a more dynamic economy with several income streams. Instead, Azerbaijan still receives around 95% of its export revenue from oil sales.

And with oil prices at around 12- year-lows this has begun to hurt.

The government has slashed spending, inflation is soaring and jobs are melting away. The manat currency has dropped a third in value in the past month and frustrated ordinary people are beginning to speak out and protest against the government.

A Conway Bulletin correspondent in Baku said people in the streets were increasingly referring to the current economic downturn as a “crisis”.

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)

Tethys looks for a new partner as debts mount up in Kazakhstan

ALMATY, JAN. 22 2016 (The Conway Bulletin) — Guernsey-based Tethys Petroleum said it will seek alternative funding after Kazakhstan-based Olisol missed a payment on a share deal agreed last year.

In a press statement, Tethys said it had received just $5m of the $15m promised by Olisol. According to Tethys, privately-owned Olisol missed the Jan. 22 deadline to send a $2m tranche of its commitment to secure a stake in the company.

Olisol has said the delay was due to currency controls in Kazakhstan linked to the sharp depreciation of the Kazakh tenge over the few past months.

And Tethys is still hopeful that it will receive Olisol’s funding.

“Should the overdue funds under the interim facility arrive in a timely manner however, Tethys will continue to work with Olisol to close the wider transaction,” Tethys, which is involved in oil and gas projects across Georgia and Central Asia, said.

Tethys needs cash to meet its debt deadlines. Last year it missed a couple of consecutive cash calls at its project in Tajikistan, the Bokhtar exploration block. Its partners in the project, China’s CNPC and France’s Total, have called on it to drop out. The Tajik government has also said it would be interested in taking a stake in Bokhtar.

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)

Editorial: Iran’s return

JAN. 22 2016 (The Conway Bulletin) – There is much excitement in our region over the emergence of Iran after over a decade of US-imposed sanctions.

New flight connections, new pipelines, new transmission lines and more is what a sanctions-free Iran could bring to the South Caucasus and Central Asia.

Iran has struck a deal with Air Astana to open the Almaty-Tehran air route. It has also revived talks with Turkmenistan about gas fields and pipelines around the Caspian.

Potentially, a new network to the east of the Caspian Sea could facilitate the European Union’s plans to import gas from the region. Azerbaijan may well be interested in such deals as well. In addition, Iran could become an important supplier of gas to both Armenia and Georgia.

On the flip side, Iran’s accession to the global oil market will undoubtedly drive the price of oil further down, it has huge oil reserves and production capacity, increasing the pressure on the budgets of oil-exporting economies in the region.

ENDS

Editorial from Issue No. 264, published on Jan. 22 2016)

Armenia asks for gas price help

JAN. 21 2016 (The Conway Bulletin) – Armenia asked Gazprom to lower the prices of gas imports by 21% to $130 per thousand cubic metres to help it weather a fierce economic storm that has hit the region.

Media reported that Armenian gas consumers currently pay an excessive price for gas. Russia reduced the cost of gas sold to Armenia last year but the government didn’t pass that saving on to consumers. It now says that it’s time to give Armenian consumers a discount.

Last year, Armenians protested at a proposed increase in the price of electricity, giving the authorities a sharp reminder of their reputation for street-level politics.

In that instance the government backed down and avoided the price rises.

Armenia is a key Russian ally in the South Caucasus. The Russian military maintains a major base in Armenia.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Stock market: Tethys, KAZ Minerals, Centerra

JAN. 21 2016 (The Conway Bulletin) — Tethys shares dropped to their lowest price since listing in 2011, falling 18% over the last week to 1.75p. Our graph shows its fall since the start of December.

Problems at its operations in Tajikistan may have dented investors’ confidence. China’s CNPC and France’s Total, its partners in the Bokhtar oil project, have said they want Tethys to exit the venture.

Last week, also, the Tajik government joined the fray and said it might expropriate 25% of the licensed area, as production hasn’t started yet.

Commodities prices were stable, after months of depreciation against the US dollar. But this has not helped all miners in the region. In fact, Centerra shares fell, due to the ongoing controversy with its Mongolian operations. On the upside, KAZ Minerals continued its upward trend, thanks to the continued depreciation of the Kazakh tenge. Its costs are in tenge. Its earnings in US dollars.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Low oil prices hurt Georgia

JAN. 21 2016 (The Conway Bulletin) – Although not an energy producing country, Georgia is also suffering heavily from the continued low oil prices, PM Giorgi Kvirikashvili said during a speech at the Davos Economic Forum. He said that as an oil trading nation, investment linked to energy has dried up over the past year. Mr Kvirikashvili again said that the government was looking into a 0% tax scheme on reinvested profits.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Ozenmunaigas denies media reports

JAN. 19 2016 (The Conway Bulletin) — Ozenmunaigas, a subsidiary of Kazakhstan’s state-owned energy company Kazmunaigas, denied reports in the media that it has received preferential treatment over taxes owed to the government. In a separate statement, Kazmunaigas said that Ozenmunaigas’s break-even oil price for the first three quarters of 2015 was $65/barrel, above the average global price of $55/barrel.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Turkmenistan retrieves another oilman body

JAN. 11 2016 (The Conway Bulletin) – The Turkmen authorities retrieved the body of another missing Azerbaijani oil worker in the Caspian Sea. A storm hit an oil field in the Azerbaijani sector of the Caspian Sea shortly before Christmas, triggering a fire that killed 33 people. It was the worst offshore oil rig accident since Piper Alpha, in the North Sea, in 1988. Some of the bodies have been found in the Turkmen sector of the Caspian Sea.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Tajikistan says it’s unhappy with progress on oil and gas field

DUSHANBE, JAN. 12 2016, (The Conway Bulletin) — The Tajik government said it was dissatisfied with the progress of the Bokhtar Operating Company, a joint venture between Tethys Petroleum, Total and CNPC which is exploring the country’s most promising oil field.

Murod Jumazoda, head of the government’s Geology Department, said the consortium was developing the site too slowly and that this could result in the government seizing 25% of the licensed area.

“They [the companies forming the joint venture] will have to return 25% of the oil and gas exploration area to the government this year,” Mr Jumazoda said at a press conference.

According to Tajik law, the government has the right to take back up to 25% of a licensed oil and gas area that has failed to produce within seven years of the license being granted. But Tethys, which is listed on the London stock exchange, disagreed with the government’s interpretation of the law.

“The first relinquishment is not due until 2020,” a PR agency speaking on behalf of Tethys told The Conway Bulletin.

This may become controversial as it was in 2008 that the Tajik government awarded Tethys an exploration licence to explore a 36,000 square km area around 100km south of Dushanbe for oil and gas.

But, and this is probably what Tethys’ PR agency was alluding to, the present composition of the Bokhtar Operating Company, owned by Tethys Petroleum, CNPC and Total, was finalised in 2013.

According to Tethys’ calculations, the field holds around 27.5b barrels of oil equivalent of recoverable resources. For Tajikistan, which is resource poor, this is a tantalising prospect.

Tethys is the lead operator of the Bokhtar Operating Company.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Czech company boosts deliveries to Uzbekistan

JAN. 13 2016 (The Conway Bulletin) — Czech engineering company Armatury Group delivered valves worth €3m ($3.3m) to Eriell, a service company operating in Uzbekistan’s oil fields, according to the group’s press release. Eriell, a Russian drilling company, is a supplier to another Russian company, Lukoil, which operates several oil and gas projects in Uzbekistan. The valves will be installed at a compressor station in the South Kemachi oil and gas condensate field, near Uzbekistan’s border with Turkmenistan.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)