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Energy in Azerbaijan

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  • Re: Energy in Azerbaijan

    Azerbaijan’s credit ratingwas cut to junk by Standard & Poor’s as the former Soviet Union’s third-biggest oil exporter grapples with a collapse in crude prices.
    The rating was lowered to BB+ from BBB-, Azerbaijan’s first ever reduction, according to a statement on Friday. S&P assigned a stable outlook. Fitch Ratings and Moody’s Investors Service have the Caspian nation at their lowest investment-grade levels with stable outlooks.

    “Oil prices have declined further over the last several months and we now anticipate Azerbaijan’s general government will run deficits through 2018,” S&P said. “In our view, external risks are increasing, with the central bank’s foreign currency reserves declining by two-thirds from their mid-2014 peak.”

    Azeri officials have held talks with the International Monetary Fund as the renewed drop in energy prices wreaks havoc on the economy. While Finance Minister Samir Sharifov said this week that the government isn’t asking for a bailout loan, the central bank burned through more than 60 percent of its reserves last year to defend its currency, the manat. Governor Elman Rustamov has said as many as seven banks may be merged to bolster an industry where six lenders were closed this week alone.
    Capital Controls

    Azerbaijan has placed restrictions on the movement of capital after the manat fell by about half in 2015, with the central bank allowing it to float freely in December. The manat traded 1.4 percent weaker at 1.6068 against the dollar at 8:35 p.m. in the Azeri capital of Baku.
    The government’s 2024 dollar bond stayed lower after Friday’s downgrade, with the yield up 9 basis points to 6.60 percent. That takes the monthly increase to 82 basis points, data compiled by Bloomberg show.

    S&P said Azerbaijan’s economy will shrink 1 percent in 2016, with gross domestic product per capita plummeting by almost half to $4,100 from $8,000 two years ago. The ratings company said oil production, the mainstay of economic growth, would probably decline by 1 percent to 2 percent a year without sustained investment.
    Azerbaijan isn’t alone in the former Soviet region in facing financial strains from the oil-price slump. Russia, the world’s biggest energy exporter, and Kazakhstan moved to free-float regimes in the past year as their currencies came under pressure.

    “Azerbaijan is one the many net commodity exporters that is having to face a reality check as ratings agencies increasingly warn of downgrading potential,” Simon Quijano-Evans, an emerging markets strategist at Commerzbank AG in London, said by e-mail shortly before the rating cut.



    ---

    The markets are doing to Azerbaijan what Armenian warriors did to it in the 80s and 90s. Serving up some hot slices of reality.

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    • Re: Energy in Azerbaijan

      S&P cuts Azerbaijan to junk on oil concern
      http://www.ft.com/fastft/2016/01/29/...n-oil-concern/

      Comment


      • Re: Energy in Azerbaijan

        Originally posted by Joseph View Post
        Some is left- I believe that their sovereign fund is has some type of over-site by the Norwegians or something. I'll research that and get back. We know its lost about 4% to date but could be more and will not last unless the spend it miserly and just invest it safely...something the Aliyev's are loathe to ever do.
        It used to have a high transparency rating until about two years ago. There's an international transparency rating system of foreign wealth funds. However, about the time it was predicting this fund would start decreasing for the first time, they became less transparent about it. I have a lot of trouble believing this years numbers. Before the oil price went down, it was already projected that the fund would decrease in 2015 for the first time. However, somehow, according to their official number, with the oil price what it was, the fund somehow increased from end of Q2 to end of Q3.

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        • Re: Energy in Azerbaijan

          Originally posted by Mher View Post
          It used to have a high transparency rating until about two years ago. There's an international transparency rating system of foreign wealth funds. However, about the time it was predicting this fund would start decreasing for the first time, they became less transparent about it. I have a lot of trouble believing this years numbers. Before the oil price went down, it was already projected that the fund would decrease in 2015 for the first time. However, somehow, according to their official number, with the oil price what it was, the fund somehow increased from end of Q2 to end of Q3.
          This is probably why they don't want a bailout by the IMF. They would have to show the actual figures of SOFAZ. What you are saying is true, it's probably innaccurate numbers they're giving. I'm curious as to why they're asking for $4bln only. I'm curious what they discussed with the IMF and what they revealed about their budgets.

          Reading rhe reuters articles, this month alone I can track $250 miln the CBA sold. I'm waiting to see the figures on their central banks website, it's updated once a month. Last time I checked it was $5.06bln. If that number doesn't dip below 5 next month when it's updated, either SOFAZ is now transferring cash to their CBA or they're fudging the numbers.

          Comment


          • Re: Energy in Azerbaijan

            Turkey Hunts for Alternatives to Russian Energy
            January 27, 2016

            With Russian-Turkish relations bottoming out after Turkey’s downing of a Russian military jet last November, Ankara is scrambling to reduce its dependency on Russian gas. But the help it needs from post-Soviet energy producers may not be swift in coming.

            The Caspian Sea state of Azerbaijan, Turkey’s closest ally in the post-Soviet region, was the first place Turkish Prime Minister Ahmet Davutoğlu visited after the November 24 downing incident. And most recently, Davutoğlu met with Azerbaijani President Ilham Aliyev in Davos on January 20.

            “Two nations, one people” is a popular mantra that officials in both Turkey and Azerbaijan use to describe their relationship. And yet when it comes to energy, there seems to be limits to this unity.

            For one, Azerbaijan is not the gas producer that Russia is. The 27 billion cubic meters (bcm) of Russian gas Turkey received in 2015 — 55 percent of its overall supply — is about 1.4 times the size of Azerbaijan’s entire volume of produced gas for that year, noted Ilham Shaban, director of the Baku-based Caspian Barrel, an energy research center.

            Turkey currently receives 6 bcm of gas from Azerbaijan, an amount that constitutes about 75 percent of Baku’s annual exports, he added.

            Some Turkish observers pin their hopes for energy diversification on TANAP (Trans-Anatolian Natural Gas Pipeline), the Europe-bound, 1,850-kilometer-long pipeline from Azerbaijan’s Shah Deniz field that will cross through Turkey. The two countries last month agreed to finish the conduit before 2018, its originally scheduled completion date, even though it is not yet known where all the gas to fill the new route will come from.

            Although the first gas shipments to Turkey are expected by late 2018, large-scale shipments of 12 bcm per year will not come until 2021, said Shaban.

            “We obviously can improve [the amount of gas sent] in the direction of Turkey,” he said. “But right now, it is not realistic, regardless of the situation.”

            Revised completion dates for the pipeline and first gas deliveries have not yet been officially announced.

            One Turkish energy analyst believes other factors may also affect Azerbaijan’s enthusiasm for deepening its energy relationship with Ankara. “It is no secret that, mainly due to regional political dynamics, Baku has been playing a balancing act in between Moscow and Ankara,” said Emre İşeri, an expert on regional energy politics for Yasar University in the Turkish city of Izmir.

            That careful balancing act was spelled out this month by Azerbaijan’s ambassador to Turkey, Faiq Bagirov, in an interview with Turkey’s Daily Sabah newspaper, a governmental mouthpiece. “There is no other example for relations between Turkey and Azerbaijan” apart from “always” standing “together,” Bagirov stressed. At the same time, “Azerbaijan also has good relations with Russia, along with a strategic partnership.”

            Baku has good cause to be careful. “There will be sensitivity in Baku not to be too confrontational with Russia,” argued Sinan Ülgen, a specialist on Turkish foreign policy and a visiting scholar at the Carnegie Europe think-tank in Brussels. “Russia is a major player in the region. It can hurt Azerbaijan indirectly in many ways, especially in the Nagorno-Karabakh conflict.” Indeed, tensions over the disputed territory have recently heightened between Azerbaijan and Armenia, Russia’s closest military ally in the region.

            With Russia’s economy already hobbled by low energy prices, Rashad Shirin, an independent Azerbaijani political consultant, wonders whether the state-run behemoth Gazprom can afford to stop gas sales to Turkey, its second largest foreign market after Germany.

            Shirin does not expect Baku to yield automatically to any Russian pressure to back off Turkey. “[I]n this situation,” he said, “Azerbaijan will do everything in its interest.”

            Turkish and Ukrainian cargo blocked from Russia now travel via Azerbaijan to reach Central Asia. In early December 2015, to enhance this route’s attractiveness, Baku slashed transit fees for cargo traveling to Kazakhstan and Turkmenistan by 40 percent.

            “We should seize this opportunity,” recently stressed Akif Mustafayev, Azerbaijan’s envoy to TRACECA, a 13-member body that promotes ties between Black Sea countries, the South Caucasus and Central Asia, AzerNews reported.

            In Central Asia, a predominantly Turkic region that Turkey’s ruling Justice and Development Party has been cultivating for the last few years, a reluctance to become embroiled in Ankara’s tussle with Moscow is more apparent.

            President Nursultan Nazarbayev of gas-rich Kazakhstan has taken Russia’s side in the conflict. Turkmenistan, another major energy supplier, has avoided commenting publicly, and officials in Ashgabat declined to make any public comments on energy relations when Turkish President Recep Tayyip Erdoğan visited the Turkmen capital in December.

            Both Ankara and Baku have promoted the idea of a trans-Caspian pipeline from Turkmenistan to Azerbaijan, but energy expert İşeri cautioned that low energy prices, along with the lingering territorial squabble over the Caspian Sea, mean that “investors will think twice to make this kind of politically risky projects.”

            Turkey also has gotten the cold shoulder from Kyrgyzstan, which does not export energy, but does receive an undisclosed amount of Turkish development aid. At December’s Moscow summit of Commonwealth of Independent States members, Kyrgyz President Almazbek Atambayev criticized Ankara for the downing of the Russian plane and suggested that Erdoğan, whom he previously termed “my older brother,” should apologize to Russian President Vladimir Putin.

            Erdoğan made little effort to hide his displeasure. “If nothing else, it was an unfortunate statement,” a presidential aide, Ibrahim Kalin, remarked at a December 28 press briefing.

            Editor's note: Dorian Jones is a freelance reporter based in Istanbul. Durna Safarova is a freelance journalist who covers Azerbaijan.

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            • Re: Energy in Azerbaijan

              Calculate live currency and foreign exchange rates with the free Xe Currency Converter. Convert between all major global currencies, precious metals, and crypto with this currency calculator and view the live mid-market rates.


              Dollar/Manat down to 1.63, down four more percent since second devaluation. Actually street rate in Baku at 1.85
              Last edited by Mher; 01-31-2016, 12:38 PM.

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              • Re: Energy in Azerbaijan

                A lot of important data

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                • Re: Energy in Azerbaijan

                  Originally posted by Mher View Post
                  Thanks!
                  General Antranik (1865-1927): “I am not a nationalist. I recognize only one nation, the nation of the oppressed.”

                  Comment


                  • Re: Energy in Azerbaijan

                    Azerbaijan Unlikely to Get Loans from International Financial Institutions

                    Last week’s negotiations of the missions of international financial institutions with the leadership of Azerbaijan were difficult and fruitless.

                    As it became known to Turan from unofficial sources, in response to the request for credits, five requirements were billed: wide privatization, reduction of the state apparatus, a real judicial reform, the freezing of wages, pensions and public spending, and accession to the WTO.

                    According to the same source, of the five conditions the country's government agreed only to the first two. In consequence of that, the international organizations considered the issuing of loans impossible.

                    This gives reason to believe the government is not ready to conduct serious anti-crisis reforms.

                    According to the Financial Times, the Azerbaijani authorities planned to get loans of 4 billion USD from the IMF and the World Bank. However, the President denied the reports, calling them "false information from anti-Azerbaijani forces," and added that Azerbaijan does not need foreign financial assistance. -02B-

                    Comment


                    • Re: Energy in Azerbaijan

                      Originally posted by Mher View Post
                      http://www.xe.com/currencyconverter/...rom=USD&To=AZN

                      Dollar/Manat down to 1.63, down four more percent since second devaluation. Actually street rate in Baku at 1.85
                      XE shows 1.63, Azeri websites show 1.60
                      Nevertheless, black market is well operating there

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