(EnergyAsia, December 3 2015, Thursday) — The International Energy Agency (IEA) has delivered another piece of news to beat down any hopes for a near-term recovery in oil prices: global stockpile have just topped a record three billion barrels.
(EnergyAsia, December 2 2015, Wednesday) — Moody’s Investor Service said Asian downstream oil companies can expect modest growth and healthy margins in 2016 with crude prices staying low and the region’s refining capacity glut easing off.
(EnergyAsia, November 25 2015, Wednesday) — Faced with its worst economic and financial downturn in nearly a decade, Kazakhstan is looking again to China to repeat its rescue act of 2008-2009.
According to the International Monetary Fund, Kazakhstan will have the region’s worst performing economy this year as its growth will slow to just 1.5% from nearly a third of last year’s 4.3%, and to 2.4% in 2016. A toxic combination of low oil prices, weak domestic demand and decline in external trade will likely turn the country’s years of fiscal and current account surpluses into deficits in 2015.
Central Asia’s largest economy is also paying the price for its heavy economic dependence on sanctions-hit Russia and slowing China, an ironclad formula that produced annual double-digit growth most of this century when those two countries were super performers themselves. All of Central Asia is hurting from Russia’s sharply devalued currency and recessed economy hit by Western sanctions over Moscow’s conflict in Ukraine.
In response, Kazakhstan devalued its tenge by 19% against the US dollar last year and allowed it to sink another 26% this year. But that won’t be enough to stop the current account turning from a surplus of nearly US$6 billion last year into a deficit of US$5 billion with inflation to surge past the official target of eight percent.
Sufficiently desperate, President Nursultan Nazarbayev is once again turning to China as the likely white knight that had previously rescued the Kazakh economy from the depths of the last financial crisis in 2008-2009.
Thanks largely to Beijing’s financial and political support, Kazakhstan and Turkmenistan were able to develop the foundation of Central Asia’s pipeline and support infrastructure to export oil and gas to China.
On December 12, 2009, Nazarbayev and other Central Asian leaders together with China’s then president Hu Jintao jointly inaugurated the Kazakh section that started up the 1,833-km Central Asia–China gas pipeline network. Two days later, the Chinese leader was in Turkmenistan to complete the launch of the new pipeline network that has played a major role in Central Asia’s economic take-off this decade.
From just over US$6.8 billion in 2005, Sino-Kazakhstan trade rose to US$20 billion in 2010 and US$28 billion in 2013 as China’s gas demand surged. But reflecting the slowdown in both economies and the decline in oil and gas prices, bilateral trade value plunged by over 21% last year. The two sides have scaled back their plans and are aiming to achieve bilateral trade of US$40 billion by 2020 instead of 2016.
In a series of intense meetings between May and September, Nazarbayev and Chinese President Xi Jingping agreed to strengthen ties and increase cooperation in trade, and joint investments in energy, infrastructure and high technology projects. This year, the two leaders have signed agreements to implement 25 energy, industrial and infrastructure projects worth a total of US$23 billion.
The Kazakh leader, who has been in power since his country’s independence from the former Soviet Union in 1991, has endeared himself to Xi with his pledge to support Beijing’s most important projects, the Asian Infrastructure Investment Bank (AIIB) and the revived, expanded Silk Road.
China is poised to add to its already substantial presence as the leading foreign investor in Kazakhstan with more than US$17 billion worth of assets. Chinese firms will implement rail and road projects through Kazakhstan as part of China’s grand plan to link up the continents of Asia and Europe under its Silk Road strategy.
For its contribution to the Kazakh economy, China may yet land the most coveted prize: approval for state-owned China National Petroleum Corporation (CNPC) to buy into the giant northwestern Karachaganak gas condensate field to add to its 8.33% stake in the Kashagan oil field.
Karachaganak is controlled by Karachaganak Petroleum Operating B.V. (KPO), according to UK’s BG Group, which owns a 29.25% stake in the company. Its partners include Italy’s ENI (29.25%), US major Chevron (18%), Russia’s LukOil (13.5%) and Kazakhstan’s state-owned KazMunaiGas (10%).
Karachaganak accounts for around 45% of the country’s total gas production and approximately 16% of total liquids production. It holds around nine billion barrels of condensate and 48 trillion cubic feet of of gas, according to BG.
In September 2013, CNPC paid US$5 billion for a stake in the Kashagan oil project in the Caspian Sea.
(EnergyAsia, November 24 2015, Tuesday) — Thanks to the adoption of fracking technology, the US boosted its oil reserves to a 42-year high of 39 billion barrels and natural gas to an all-time high of 388.8 trillion cubic feet (11 trillion cubic metres) at the end of 2014. But, the Energy Information Administration (EIA) said…
(EnergyAsia, November 23 2015, Monday) — Down by over 65% since mid-2014, crude oil prices could fall another 50% to the US$20s a barrel next year, said analysts at Wall Street firms.
(EnergyAsia, November 20 2015, Friday) — Despite reports of a December start-up, the construction of possibly Asia’s most ambitious pipeline project to supply natural gas from Turkmenistan to Afghanistan, Pakistan and India remains shrouded in doubt as it faces a myriad of mounting financial, political and security problems.
(EnergyAsia, November 13 2015, Friday) — Iraq’s hydrocarbon-rich Basra province is establishing a regional company to attract foreign direct investment to build up its oil, gas and infrastructure for the long-term development of the economy. “Basra Company is the vehicle through which the provincial government will optimise utilisation of resources and position Basra as the…
(EnergyAsia, November 12 2015, Thursday) — The world is at risk of becoming complacent to energy security threats with an expected prolonged period of low oil and gas prices looming ahead, said the International Energy Agency (IEA). While consumers stand to benefit, the market is increasingly at risk from both a growing reliance on a…
(EnergyAsia, November 3 2015, Tuesday) — Jubail Chemicals Storage and Services Company (JCSSC), a company 25% owned by Royal Vopak of the Netherlands, has signed two agreements to provide liquid product storage and handling services at the King Fahd Industrial Port (KFIP) in Jubail in Saudi Arabia’s Eastern Province. JCSSC, 75% owned by Saudi Basic…
(EnergyAsia, November 1 2015, Sunday) — Global oil demand growth will slow sharply to 1.2 million b/d next year after reaching what would be a five-year high of 1.77 million b/d in 2015, predicts the International Energy Agency (IEA).
(EnergyAsia, October 31, 2015, Saturday) — Still reeling from the effects of the global financial crisis of 2008, the World Bank said Central Asia is facing “strong headwinds” from a set of new challenges brought on by the continuing weakness in oil and gas prices, Russia’s recession and worsening relations with the West, the slowdown in China and Europe’s problems with refugees fleeing Syria and Iraq.
(EnergyAsia, October 30 2015, Friday) — Two Canadian companies have made important progress in their respective projects to export gas products from British Columbia province to Asia.
(EnergyAsia, October 30 2015, Friday) — In their darkest moment in over two decades, Central Asia’s beleaguered economies may have found another white knight in Japanese Prime Minister
(EnergyAsia, October 29 2015, Thursday) — Singapore’s Pavilion Energy said it has signed a 10-year agreement to procure liquefied natural gas (LNG) from Russian gas giant Gazprom to support its trading and supply activities in Asia.
(EnergyAsia, October 28 2015, Wednesday) — Consultant Wood Mackenzie has more bad news for the already battered liquefied natural gas (LNG) markets: prices will be further tested by a deluge of new supply amid weak demand in China. In a report prepared for Gastech 2015 in Singapore, the UK firm said it expects producers to…
(EnergyAsia, October 27 2015, Tuesday) — One of Australia’s leading oil and gas companies, Santos Limited, said it is continuing a strategic review of its business after rejecting a buy-out offer of A$6.88 per share that values the beaten-down company’s value at A$7.14 billion. (US$1=A$1.38).
(EnergyAsia, October 25 2015, Sunday) — Any hopes for an oil price rally in the remaining months of 2015 are being dashed by the continuing build in global stockpiles as production is still growing at a faster rate than consumption, said the US Energy Information Administration (EIA).
(EnergyAsia, October 25 2015, Sunday) — Central Asia’s eight nations will continue to reel from the impact of weak oil prices, with little hope of their economies recovering to the levels before the collapse of the energy markets in mid-2014, said the International Monetary Fund (IMF).
(EnergyAsia, October 23 2015, Friday) — UK major BP said it has signed an oil and gas framework agreement with China National Petroleum Corporation (CNPC) and a 20-year deal to supply liquefied natural gas (LNG) to China Huadian Corp worth US$10-billion. BP said it expanded an ongoing global partnership with CNPC by agreeing to jointly…
(EnergyAsia, October 21 2015, Wednesday) — US liquid fuels consumption will reach a seven-year high of 19.44 million b/d this year and rise further to 19.59 million b/d in 2016 on the back of the country’s continuing economic and employment growth, predicts the Energy Information Administration.
(EnergyAsia, October 1 2015, Thursday) — More than 1,000 top government officials and executives of oil and gas companies are expected to attend the 22nd Africa Oil Week and Africa Upstream Conference in Cape Town, South Africa on October 26-30. Global Pacific & Partners and ITE Group plc will jointly host the landmark event that…
(EnergyAsia, October 1 2015, Wednesday) — Greenpeace celebrated a “huge victory” to protect the Arctic from hydrocarbon production and exploration when Royal Dutch Shell announced it would cease all work in Alaska’s Chukchi Sea that forms part of the region.
(EnergyAsia, October 1 2015, Thursday) — The US Energy Information Administration (EIA) expects the world’s oil surplus to continue widening this and next year as it trimmed its forecasts for demand slightly while raising supply in its September monthly report.
(EnergyAsia, October 1 2015, Thursday) — Singapore is inviting companies to tap a S$12 million fund to help its port develop the use of liquefied natural gas (LNG) as a shipping fuel and remain the world’s top bunkering hub. (US$1=S$1.43). The Maritime and Port Authority of Singapore (MPA) said its Maritime Innovation & Technology Fund…
(EnergyAsia, September 30 2015, Wednesday) — Amid the worst oil glut in over a decade, a Norwegian research firm wants the world to start worrying about possible oil price shocks.