Tag Archives: refining

Kazakh energy company confirms deal with China’s CEFC to sell refinery

ALMATY, DEC. 15 2016 (The Conway Bulletin) — Shrugging off a Romanian investigation into the privatisation in 2003 of its main refinery asset, KMG International, the Black Sea orientated subsidiary of Kazakhstan’s state-owned energy producer Kazmunaigas, reaffirmed its commitment to sell a 51% stake in the company for $680m to China’s CEFC.

If the deal, first put together in May, does go ahead it will be a relief to the Kazakh government which has been trying to raise much needed cash to see it through a steep economic downturn linked to a sharp drop in oil prices.

For China, the 51% stake in KMG International would give it control over the Petromida refinery on Romania’s Black Sea coast near Constanta, which has a refining capacity of 5m tonnes of oil a year. The company also controls hundreds of petrol stations across Romania, Bulgaria, Moldova and Georgia through the Rompetrol brand.

KMG International’s CEO, Zhanat Tussupbekov, said the financial backing of CEFC would allow the company to expand.

“The strategy of KMG International with its new major shareholder aims at developing major projects, Romania being the business priority,” he said.

“We plan to increase the refining capacity to 10m tonnes of crude per year, to build up to 200 new fuelling points, to develop industrial services in upstream and downstream areas, as well as to build a co-generation plant on Petromidia platform.”

Importantly, though, the deal still needs regulatory approval from the EU, Romania and China.

The original deal for the sale had stalled because of a Romanian investigation into the purchase of Rompetrol, which owned the Petromida refinery, by Dinu Patriciu in 2003 for $760m. He sold the refinery four years later for $1.6 to Kazmunaigas. Patriciu died in 2014. The investigation into the deal doesn’t appear to be concluded.

Kazmunaigas International owns 55% of the company that owns the Petromida refinery. The Romanian government owns the other 45% of Petromida.

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(News report from Issue No. 310, published on Dec. 23 2016)

Turkmenistan to modernise oil refineries

NOV. 22 2016 (The Conway Bulletin) — Turkmen president Kurbanguly Berdymukhamedov ordered his government to modernise the country’s oil refineries so that it could boost its output of refined oil to 20m tonnes by 2020, 22m tonnes by 2022 and 25m tonnes by 2025, media reported. The Central Asia region in general has been suffering from a shortage of refinery capacity.

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(News report from Issue No. 306, published on Nov. 25 2016)

Kazakh oil company completes maintenance

NOV. 9 2016 (The Conway Bulletin) — Oil company PetroKazakhstan said it has completed planned maintenance and remodelling work at its Shymkent refinery three days ahead of schedule. Kazakhstan’s ministry of energy has repeatedly said that the country needs to upgrade its refineries and build a new one. London-traded KMG EP, a subsidiary of state-owned Kazmunaigas, owns a 33% stake in PetroKazakhstan, while China’s CNPC owns the rest.

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(News report from Issue No. 304, published on Nov. 11 2016)

Georgia signs deal with Iran to build new oil refinery

TBILISI, SEPT. 29 2016 (The Conway Bulletin) — Georgian-Iranian company GEOPARS signed a deal with the Georgian government to build an oil refinery in Supsa on the Black Sea coast, the first to be built in Georgia for 80 years.

According to local media, the government licensed the land to GEOPARS for free. GEOPARS said it would need to make an investment of $1.5b to build the refinery, a petro- chemical plant and a logistical centre.

PM Giorgi Kvirikashvili attended the signing ceremony and hailed its impact on Georgia’s industrial sector.

“We will see a project that once again accentuates and reinforces Georgia’s regional role as the shortest route to Europe for Near East and Asian countries. This is a project that puts Georgia on a map by highlighting not only its transit function, but its industrial role as well,” local media quoted him as saying.

Caution is needed, though. Georgia has negotiated building an oil refinery in Supsa or Poti several times previously with Azerbaijani, Kazakh and Russian investors but the deals eventually fell through.

SOCAR Georgia Investments, a subsidiary of Azerbaijan’s state owned energy company SOCAR, had proposed building a refinery in Supsa in May, but failed to commit funds.

This is the first refinery deal in Georgia made with Iran, which has played an increasingly active role in the South Caucasus over the past few years. If the project does go ahead, it will give Iran an important foothold in Georgia, a close US ally.

The only major oil refinery previously built in Georgia was at Batumi in the 1930s. The Batumi refinery was downgraded in the 1990s and sold to Kazakh investors. It later became an oil terminal.

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(News report from Issue No. 298, published on Sept. 30 2016)

Kyrgyzstan receives tax back from Chinese refinery company

SEPT. 20 2016 (The Conway Bulletin) – Kyrgyz MP Yekmat Baibakpayev said that the state budget received just over 1b som ($15m) from the China-run Junda refinery, which faced closure this year for evading taxes. Mr Baibakpayev said that the oil refinery, located in the north of the country, owes the government five times as much. The Junda refinery was built by the China Petrol Company for $430m and opened in 2014.

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(News report from Issue No. 297, published on Sept. 23 2016)

Dispute threatens Kazakh refinery company’s sale of Romanian refinery

JULY 27 2016 (The Conway Bulletin) — A legal battle between Kazakhstan’s KMG International and the Roma- nian government risks stalling a $680m deal to sell a majority stake in the Kazakh company’s refinery to China’s CEFC.

KMG International, formerly known as Rompetrol, is preparing to lodge a lawsuit against the Romanian government over the seizure in May of its assets, according to the FT.

The Romanian government has said the Petromidia refinery, the largest in the country, was illegally privatised in the early 2000s before Kazmunaigas bought Rompetrol.

KMG International has now submitted a legal note to the Romanian government that will escalate the dispute.

“Romania is using its governmental power to undermine that transaction and re-nationalise the assets,” the FT quoted KMG International as saying in a letter to the government.

KMG International had to delay finalising the deal with CEFC, which in December agreed a $680m fee to buy 51% of the refinery.

Robert Cutler, Senior Researcher at the Institute of European Studies at Carleton University, Montreal, said that Romania was looking to block the sale.

“Kazakhstan is about to find out what it is like to be on the receiving end of ‘resource nationalism’, which it [Kazakhstan] has successfully used against foreign investors over the last decade,” he told The Conway Bulletin.

This delay and the asset freeze has angered officials at both KMG International and Kazmunaigas, its parent company.

Senior company officials have said that they will take legal action if the refinery sale is delayed.

Romanian investigators have focused on recovering cash from an allegedly illegal privatisation of the refinery in 2003, when the late Dinu Patriciu bought Petromidia for $760m. In 2007, Patriciu sold Rompetrol, which controlled Petromidia, to Kazmunaigas for $1.6b.

In the following years, the government acquired an 18% stake in the refinery.

Now, analysts say, the government might be looking to renationalise the refinery, an important and lucrative asset for Romania.

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(News report from Issue No. 291, published on Aug. 1 2016)

Turkish police arrests CEO of Azerbaijan’s state energy company for links to Gulen movement

AUG 1 2016 (The Conway Bulletin) — Turkish authorities have arrested Sadettin Korkut, former CEO of Petkim, an Azerbaijan-owned refinery on Turkey’s Mediterranean coast, in what media said was part of a purge of people linked to exiled cleric Fethullah Gulen (July 28).

Azerbaijan’s state-owned energy company SOCAR dismissed the claim, saying that the arrest was linked to a spat with another employee of SOCAR Turkey Enerji, its Turkish subsidiary.

Mr Korkut had resigned as CEO, a position he had held for four years, the day before he was arrested. Twenty-seven other employees of SOCAR’s Turkish subsidiary, which operates the Petkim refinery, were also sacked at the same time.

Turkish media immediately linked the arrest and the sackings to the Gulenist movement, which they dub a terrorist network.

“Around 200 workers from Petkim and related companies were sacked due to their alleged ties to the Gulenist Terror Organisation (FETO),” the Turkish state-run Anadolu Agency reported.

Around 60,000 public sector employees and dozens of journalists and businessmen were arrested in Turkey in the aftermath of an attempted military coup on July 15. Turkish President Recep Tayyip Erdogan accused Mr Gulen of masterminding the coup from his exile in the US.

Azerbaijan is one of Turkey’s strongest allies. It backed the arrest.

“SOCAR’s management believes that Turkey will become stronger after these difficult days. We will continue to operate and invest in Turkey with all of our energy,” Vagif Aliyev, CEO of SOCAR Turkey Enerji said in a statement.

SOCAR Turkey Enerji and SOCAR Turkey Petrokimiya own a majority stake in Petkim.

Anar Mammadov, head of SOCAR’s Greek subsidiary, has been appointed new CEO of Petkim.

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(News report from Issue No. 291, published on Aug. 1 2016)

Kazakhstan and Iran to build refinery

JUNE 27 2016 (The Conway Bulletin) — Kazakhstan and Iran will build a new refinery in the Iranian Caspian Sea port of Amirabad, Golestan,specifically to process Kazakh oil for export. It is unclear how much the refinery is going to cost to build and when it will be operational but it is probably the biggest single joint venture between the two countries since many Western sanctions on Iran were lifted in January.

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

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)

Refinery capacity rises in Turkmenistan

MAY 31 2016 (The Conway Bulletin) — Turkmenistan’s ministry of oil and gas said it wants to double oil refining capacity in the country over the next three years, in an effort to increase the domestic output of oil products. The ministry said it plans to increase capacity to 20m tonnes by 2020 and then to 30m tonnes by 2030. Last year, Turkmenistan missed its goal of reaching its refining capacity of 15m tonnes. It currently only process around 11m tonnes/year.

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