MARCH 8 2017 (The Conway Bulletin) — Governments across the Central Asia/South Caucasus region will be nervously watching the Brent spot price as it slips back down to that all-important $50/barrel level. This is the psychological breakpoint.

If Brent oil dips below $50/barrel, national budgets, which have just been adjusted upwards, will have to be rethought. It broke through this level in mid-December and had hovered around the $55/barrel mark since then, before taking a downturn.

Oil prices had been pushed up in mid-December by a plan lead by producers to cut output. Data, though, this week showed that crude oil stocks held by the US government have risen, raising concerns that the fragile coalition patched together to contain global production was cracking. Data from Saudi Arabia, Iraq and Nigeria also suggested that production was rising again.

Kazakhstan’s output estimate has also been increased. The US Energy Information Administration (EIA) said Kazakhstan would produce 1.88m barrels of oil/day in 2017, compared to an earlier estimate of 1.86m barrels/day. In 2016, it produced 1.73m barrels of oil/day.

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FEB. 13 2017 (The Conway Bulletin) — Kanat Bozumbayev, the Kazakh energy minister, told media that in 2016 Kazakhstan produced 78m tonnes of oil, beating an initial forecast of 75.5m tonnes. This is important because the government had been forecasting a drop in production because companies were throttling back output under the pressure of poor prices.

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FEB. 10 2017 (The Conway Bulletin) — Nostrum Oil & Gas, the London- listed and Kazakhstan-focused, oil producer hit its lowest level since the beginning of the year on Feb. 9. On its main listing in London, Nostrum’s shares were valued at 436p.

Analysts have said that the drop, which has seen it tumble from a high of 475/$1 since Feb. 1, was linked to a general softening of oil prices rather than any news linked to the company itself.

Instead most analysts have given the company a ‘buy’ rating and raised their target prices. Last month Deutsche Bank, Numis Securities, GMP Securities and

Panmure Gordon all gave Nostrum a ‘buy’ rating and targeted share prices of 535p to 600p.

Credit Suisse downgraded its outlook for Nostrum to a ‘hold’ from a ‘buy’ and targeted a price of 415p to 440p.

At the end of last month, Nostrum said in its annual report that output had just about matched expectations and that it would realise savings in 2017 through a connection to the KTO pipeline.

“(This) will allow us to realise significant savings to exported crude oil transportation costs and continue to seek to reduce costs across the business,” it said.

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