Energy in Azerbaijan

[HyeSocialist]

Re: Energy in Azerbaijan

Baku, Fineko/abc.az. The Central Bank of Azerbaijan has started the process of license withdrawal from commercial banks.

The CBA reports that the license of OJSC Bank of Azerbaijan has been cancelled by uts otday decision.

"In accordance with the Law on Banks temporary administration was appointed for Bank of Azerbaijan. The deposits in this bank were covered by guarantees of the Azerbaijani Deposit Insurance Fund, and the depositors will be paid compensation by the ADIF," the CBA said.

The causes of revocation of licenses from Bank of Azerbaijan was the fact that the adequacy of its capital fell below 3%, and the Bank could not fulfill the demands of creditors, and failed to meet prudential norms.

http://abc.az/eng/news_18_01_2016_93560.html

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First bank failure of 2016 from our lovely neighbors. Expect more to come.

[HyeSocialist]

Re: Energy in Azerbaijan

Jan 18 Azerbaijan's state oil company SOCAR will buy back its outstanding Eurobonds worth $500 million and maturing in 2017, it said in a statement issued on Monday.

All holders of the bonds, priced to yield 5.45 percent annually, are invited to tender their notes for purchase by SOCAR for cash, the company said. The offer is valid until 1700 London time on Jan. 26, SOCAR said.

http://www.reuters.com/article/azerbaijan-crisis-eurobonds-idUSR4N14X00O

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This is strong evidence for the retreat of the Azeri economy. Purchasing bonds back today at a lower rate means they have a strong reason to believe that they won't be able to pay in the future, leading to defaults and possibly liquidation. It also means $500mln less in the war chest.

[HyeSocialist]

Re: Energy in Azerbaijan

Jan 18 Azerbaijan's President Ilham Aliyev has ordered measures to support the economy and ailing manat currency, including a possible tightening of currency controls, help for banks, and a sell-off of state assets, state television reported on Monday.

The manat has lost 33 percent of its value against the dollar in the past month and the country has burned through more than half its foreign currency reserves trying to defend it against the effect of falling oil prices.

Speaking at a meeting of the government, Aliyev said parliament would convene in an extraordinary session on Tuesday to debate government proposals to strengthen regulations on the currency market, state TV reported.

There were no details on which regulations would be tightened, but the parliamentary session's agenda for Tuesday includes items on regulating the currency market, insurance of deposits and several changes to the tax and administrative codes. Parliament is dominated by Aliyev loyalists.

Aliyev said the government had prepared a large-scale privatisation plan with the participation of local and foreign experts, while proposals on the recovery of problematic banks were also under consideration.

He said that measures on deposit insurance and the issuance of state bonds would also help to support the currency. He also signed a decree on increasing the salaries of state employees by 10 percent from Feb. 1. The average salary in Azerbaijan is 460 manats a month($287).

The State Oil Fund of Azerbaijan (SOFAZ) sold a total of $193.9 million on the foreign exchange market on Monday in a bid to prop up the weakening manat.

It was the fund's third intervention this year. It has sold $539.9 million in total so far, while $100 million was sold by the country's central bank.

Azeri state oil company SOCAR said it had offered to buy back its outstanding Eurobonds worth up to $500 million and maturing in 2017.

The cost of borrowing for Azerbaijan's government has gone up as investors perceive the risk of holding the country's assets to have increased. Buying back the Eurobonds could save Azerbaijan money in the longer time.

http://www.reuters.com/article/azerbaijan-crisis-idUSL8N1522A0

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Let's recap:

SOFAZ has hemorrhaged under .5bln USD in just 20 days.

SOCAR is desperately trying to purchase .5bln EUR of bonds at a lower rate before the interest spikes on the markets.

Azerbaijan is selling state owned assets to raise money, but this could also be an effort to put unprofitable entities with high operational costs into private hands.

Azeri Railways has elected to no longer have its credit assessed by rating agencies

Azeri customs is planning on a move to increase customs duties upwards of 37.5%

Azerbaijan is expected to host two major unprofitable sporting events (F1 and Islamic Solidarity) this year

Mass protests and mass arrests are also beginning, interesting anti-government protests are even happening in Fizuli

The Manat is technically on free-float but it appears that the CBA is still doing its best to prop up the currency. The Manat has lost 50% of its value and officially trades for 1.6 USD, whereas on the blackmarket it goes for 1.8 USD.

[Azad]

Re: Energy in Azerbaijan

"Oil Sold for -$0.50 per Barrel. A Negative Price!
Oilprice.com By Charles Kennedy


The oil markets are on edge with oil sinking into the $20s per barrel. And last week we reported on one place where oil is already trading in the single-digits. Canada’s bitumen is selling for just $8 per barrel.

But even that rock bottom price is higher than what one oil seller earned for a shipment recently. In a bizarre turn of events, Bloomberg reported that Flint Hill Resources, a refining unit owned by the Koch brothers, said that they would purchase sour crude from North Dakota for $-0.50 per barrel."

http://finance.yahoo.com/news/oil-sold-0-50-per-192245271.html

[HyeSocialist]

Re: Energy in Azerbaijan

"Oil Sold for -$0.50 per Barrel. A Negative Price!
Oilprice.com By Charles Kennedy


The oil markets are on edge with oil sinking into the $20s per barrel. And last week we reported on one place where oil is already trading in the single-digits. Canada’s bitumen is selling for just $8 per barrel.

But even that rock bottom price is higher than what one oil seller earned for a shipment recently. In a bizarre turn of events, Bloomberg reported that Flint Hill Resources, a refining unit owned by the Koch brothers, said that they would purchase sour crude from North Dakota for $-0.50 per barrel."

http://finance.yahoo.com/news/oil-so...192245271.html

Iranian oil can't hit the market fast enough...

Stellar news.

[Mher]

Re: Energy in Azerbaijan

Karabakh Conflict: It’s All About One Man and Currency Values

Things have been tense on the Nagorno-Karabakh frontline for a long time. Somehow, over the past few years, we have heard more and more of active hostilities, the deployment of heavy weaponry and heated engagements with these new weapons.

Nagorno-Karabakh is now effectively a fortress rather than merely an ethnic Armenian enclave in Azerbaijan, due to the Nagorno-Karabakh Republic declared there by the occupying forces being backed by the Armenian authorities and the international Diaspora. Observers on the ground have no doubt that it is now enduring the heaviest fighting in years.

According to UK’s Guardian, quoting the enclave’s defence ministry, “For the first time since the ceasefire, Azerbaijan has used tanks on the Karabakh frontline,” Richard Giragosian, the founding director of the Regional Studies Centre, an independent think tank in Yerevan, has said that this offensive began on December 4, when Azerbaijan targeted Armenian positions along the “line of contact” separating the enclave from Azerbaijan proper.
In the last few months the names of soldiers who have died at this front have been published in the Armenian press – all of them young boys, born in the ’90s. To general disgust, it has been established for a long time that all those young lives, on both sides, are being lost in a no-win war which is the product of political expediency and the price of oil.

However, things have just become much more sinister. The continued existence of this conflict does indeed serve various more powerful international interests, including those of Turkey and those who support its regime. But now it is being prolonged, and all those people are dying, simply to protect one man.

What is this about?

Traditionally, escalations of this conflict are tied to specific events, such as meetings between heads of state or between Armenian delegations and officials from the US, Russia, or France. The latest outbreak of fighting coincided with a drastic fall in the value of the Azeri Manat, which lost much of its value over the past year. At the end of December Azerbaijan’s central bank abandoned its dollar peg and allowed its currency to tumble by almost a third, the latest sign of how the fall in oil prices is hurting energy-dependent economies.

Many observers have concluded that the oil price fall has been blatantly calculated, part of the larger oil and sanctions war between Saudi Arabia, the US and the Russian Federation. It is therefore inconceivable that the conflict would be immune to such high-level machinations.

It can be argued that both the price fall and the outbreak of heavier fighting is a coded threat to topple the Azeri régime, which already suffers from a bad case of Dutch Disease, not having a diversified economy, and a chronic overdose of endemic corruption. Baku already relies on oil and gas for almost 95 percent of its export revenues, the rest being made up of hazelnuts and agricultural commodities. Without these revenues both political stability and GDP will go into a nose dive.

The price fall being imposed upon it makes Azerbaijan’s bargaining power weaker by the day. Consequently, the need to regain its territory to shore up public support becomes ever stronger. Due to OPEC overproduction and further declines in oil prices, all the marginal and non-OPEC countries will have to either dip into their sovereign wealth funds to keep their economies afloat or hope to diversify their economics. But it may be too late for Azerbaijan to do either because it has already spent much of its fund on this war, to curry favour with Turkey and other allies, as well as its own population.

Things will also get very serious in Azerbaijan if Iran gets back into the oil business, as it is threatening too, with Western support. This would create a back door export route to Turkey which will help it keep the BTC pipeline flowing. Iranian trucks hauling petrol via Georgia can already be seen openly heading in the direction of the border, further undermining Azerbaijan’s ability to remain a viable state in its present form.

But there is one thing wrong with this plan. The Karabakh conflict will not remain frozen if Azerbaijan goes under. Armenia will have free reign and a new Azeri government will be powerless to prevent it claiming the buffer territories it occupies as well as Karabakh itself. So it has to be kept engaged just enough to weaken it, but not enough to ensure its defeat. This is why the man all this fighting is protecting has suddenly come back on the scene.
Timing is everything

Prolonging the Karabakh conflict serves two main players: Turkey and the US. Turkey feels that as the new regional bigwig it is obliged to respond to Russia’s sanctions and thwarting of its plans to occupy Northern Syria. Intensifying the Nagorno-Karabakh conflict by proxy is merely another way of stirring the pot, as it knows it cannot win such a conflict, but simply do enough to prolong it for whatever period is necessary.

The US and some of its allies have a different interest. Having thought that they could control the groups they have inserted into the various Middle East conflicts, they are now watching billions of dollars of funding for anti-Assad groups go up in smoke. They need breathing space to rewrite the narrative on Syria because Russia has ripped the old one to shreds with its successful bombing campaigns.
So who can be relied upon to act in the interests of both these sometimes conflicting parties simultaneously? Step forward the man the conflict is now about – Matthew Bryza, the former Ambassador and US envoy to the Caucasus, who is so compromised, but at the same time so protected, that he will ensure the status quo is maintained, in exchange for a scandal not breaking until it can no longer affect him.

Bryza was once the US Ambassador to Azerbaijan; however, not for long. In 2005 his wife, Zeyno Baran, a Turkish-born foreign policy analyst at the Hudson Institute who has worked with Neo Con think tanks in the past, told a U.S. Senate hearing that she opposed the Congressional resolution on the Armenian Genocide. At the time Bryza was busy telling reporters that Turkey was his “second home,” but when he also made statements in denial of the Armenian genocide, his ambassadorship was short-lived.

Now Bryza has shown up in Turkey but not as a diplomat. He is now working with oil interests that has a slippery reputation. He is a board member of Turcas Petrol, which is linked to the Party of War in the US and the corporate interests behind it. It could not be otherwise. Bryza worked for the Bush White House prior to joining the State Department. You don’t get such jobs, or leave such jobs, without both giving and returning favours.

Both also have links with members of the former government of Georgia, and its fugitive ex-president Mikheil Saakashvili, who was propped up by Bryza and has now been given safe haven in Ukraine by its US-installed government. When Saakashvili was removed in Georgia he embarked on a short but highly controversial teaching gig at the Fletcher School of Government. Matthew Bryza graduated from Stanford University with a BA degree in International Relations, and also from the Fletcher School of Law and Diplomacy with an MA degree.
Saakashvili has family links with Turkish business interests and oil smuggling, which have been subject to investigation in Georgia and may now threaten his position in Ukraine. Zeyno Baran has links with Turkish intelligence, and the oil smuggling Saakashvili is involved in is undertaken through the Turkish-controlled Georgian port of Poti, which, as an extraterritorial port, can only be controlled by Turkey’s intelligence services rather than its national port or trading authorities.

So this is a man with all the right connections to serve both sides. But he is unlikely to be doing it voluntarily. This is because his links with Turkey, intelligence and corruption go even deeper than these.
The routes by which people become US Ambassadors are many and varied. In many cases, a foreign posting is a reward for some political favour. But it is unusual, and was a source of professional jealousy, that Bryza was able to step apparently seamlessly from a sensitive position in the Bush White House to a great height in the State Department without serving a more traditional diplomatic apprenticeship.
Jealousy turned to outrage when his top security clearances were discovered to have been awarded under false pretences. It then became a scandal, though only, as yet, within the intelligence community, when it was realised that he had been passing vital US intelligence to his Turkish intelligence agent wife for years. That intelligence, never entirely cataloged due to Bush administration obstruction, went to Russia, China, Iran and elsewhere.

The investigation into this matter was handled by the FBI, but it contents have never been fully disclosed. If the FB I report were made public now it would be the end of Bryza and a lot of other people. One of those could conceivably be Condi Rice who had the power, through President Bush, to quash any investigation. She was also clearly able to violate any law—at least during the Bush years – and this is what has a number of appointees from that time running scared now.

Cometh the hour, cometh the man

So Bryza has a job to do in exchange for protection, as his controllers are not going to let him drag them down with him. Already he is preparing public opinion for no solution being found to the ongoing conflict. He has said that there is “no chance that a meeting between the presidents of Azerbaijan and Armenia would lead to a major breakthrough, because there is no communication between them right now. “You can’t get a breakthrough that is meaningful if you haven’t prepared the way,” he added in an exclusive interview with Trend on October 19th.

Bryza has also stated that Russia has no ambition to resolve the Nagorno-Karabakh conflict now, as it wants a “no peace, no war” scenario which will allow it to manipulate the situation. However he added that, “I don’t think there is good chance for the [OSCE] Minsk Group process to move forward now.” This would make Russia’s position irrelevant, unless it can be used to further some interest of Bryza’s. It is clear that a position is being taken here.
This same Matthew Bryza encouraged Georgia’s leadership to enter into the 2008 Georgia-Russia war. He advised the Georgians that the United States would intervene militarily, if necessary, should Russia do the same. But, as we all know, that didn’t happen. What was the outcome? Frozen conflicts, hundreds of dead, thousands of displaced and a supposed ally emasculated by its patron. Sound familiar?

Having shown what lengths he will go to serve his protectors Bryza has been given one more chance to save himself. He has a simple, clear and deadly agenda for doing that – and as always, it is the people the US is supposed to be helping who will suffer the consequences.
Conclusion

The only other point I might add is the recent civil unrest in Azerbaijan of higher prices and falling oil’prices. Would escalating the conflict help tone things down domestically for Baku? I doubt it, but I guess the Aliyev regime doesn’t quite think so, because I imagine an expensive war would be even more expensive with a devalued currency.
As reported in recent days, “dragged down by the slump in world crude prices, Azerbaijan’s manat currency has fallen by about a third against the dollar in the past 30 days, sparking public protests that could be a taste of unrest to come for other oil-funded economies.”

Didn’t the government just reduce taxes or something in response instead? I think they got rid of value-added taxes on bread or some other essential item. But will that be enough to maintain the government in light of eroding international political support, as reflected in the international price of oil and shifting political winds, now that Azerbaijan strategic role in oil exports is no long strategic.


First appeared: http://journal-neo.org/2016/01/20/ka...rrency-values/

[Azad]

Re: Energy in Azerbaijan

[B][SIZE=3] The Karabakh conflict will not remain frozen if Azerbaijan goes under. Armenia will have free reign and a new Azeri government will be powerless to prevent it claiming the buffer territories it occupies as well as Karabakh itself.

I sure hope so! The Kura river has around 20 bridges, Ganja has around 300.000 population. It should be feasible to plug the East once for all.

[Mher]

Re: Energy in Azerbaijan

The Manat has lost another three percent this week, and oil has hit a 13 year low ,closing at $27/barrel

http://www.xe.com/currencyconverter/convert/?Amount=1&From=USD&To=AZN

[HyeSocialist]

Re: Energy in Azerbaijan

The Manat has lost another three percent this week, and oil has hit a 13 year low ,closing at $27/barrel
http://www.xe.com/currencyconverter/...rom=USD&To=AZN

Almost all consumer goods are imported into Azerbaijan, almost all food too. They need to trade in dollars to get the food. Putting capital controls on the dollar raises the question on how the heck are they going to import anything? F1 and the Islamic games are coming, those are going to require large investments. Can't wait to see what happens.

[Mher]

Re: Energy in Azerbaijan

Azerbaijan GP organisers deny F1 race under threat
21 January 2016

Organisers for the upcoming F1 Grand Prix of Europe in Azerbaijan say its inaugural event is not under threat, despite a recent global drop in oil and gas prices sparking economic concerns.

Azerbaijan is gearing up to host its maiden F1 race in June this year around the streets of its capital city Baku, but it comes at a time when global prices in gas and oil – which it is economically dependent on – have slumped.

Indeed, though Azerbaijan economy has grown sharply in recent years on the back of rising prices, the drop has caused the local currency, the Manat, to devalue sharply, raising concerns that it could be forced to rein in public spending in an effort to stabilise it again.

However, though organisers for the Baku City Circuit acknowledge the financial outlay of staging an F1 event is sizeable, they play down the negative impact such an event would have on the economy, instead maintaining that the tourism and publicity benefits would be of benefit.

“The devaluation of the Manat will have no impact with regards to the staging of the first ever Formula 1 race in Azerbaijan,” a statement issued to Crash.net said. “In fact, when the budget for the Grand Prix of Europe was approved, it was initially calculated in US dollars. As a result, we not expecting any changes to the current event budget.

“BCC shares the concerns of everyone at the current devaluation of our national currency. BCC also accepts that staging such a major event requires a significant financial outlay. However, we would once again stress that the overall economic impact - both short and long term, direct and indirect - created by staging an F1 race will be of huge benefit to the national economy.

“The impact of increased tourism and direct visitor spending that will be injected into Baku area business establishments such as restaurants, bars, hotels and retailers will see millions, if not more, pumped into the economy.

“Similarly, the hosting of the race itself will create thousands of jobs directly and indirectly linked to the event. We are confident that the staging of this race will not only play a major part in aiding the recovery in the short term but in driving the national economy forward for years to come, outweighing any existing concerns being levelled against the cost of staging it.”

http://www.crash.net/f1/news/226193/1/azerbaijan-gp-organisers-deny-f1-race-under-threat.html#818YFoiDTSpVPi4Z.99