Energy in Azerbaijan

[HyeSocialist]

Re: Energy in Azerbaijan

They have the funds to pay their debt but decided to take the lower credit rating and screw their bond holders.

"Creditors Cry Foul After Default as Azeri Bank Offers Debt Swap

Investors dismayed at being forced to accept a 20 percent principal writedown in a debt restructuring of Azerbaijan’s biggest bank were met with a warning that it may be shut down if creditors fail to back the plan, with the finance minister saying the lender never had the benefit of full sovereign guarantee.

“Creditors are very angry about the haircut,” said Lutz Roehmeyer, who manages about $2.2 billion including IBA bonds at Landesbank Berlin Investment and plans to vote against the plan. “This proposal shows the unwillingness to pay of the sovereign while at the same time having the full ability to pay. This will make funding long term costlier to Azerbaijan.”"

https://www.bloomberg.com/news/artic...debt-new-bonds

OMG. This is what they deserve! This is justice of the most maximum kind and the only thing upsetting is that it's only going to cost the Azeris 6% of their GDP and their "credit." If only the Euros lost MORE money. At least 20bln sunk would have been better for us.

This is what they get for straight up siding with a dictator. With a corrupt autocracy. xxxxers. I hope this sh*t is a fatal blow to whatever is the "azeri economy."

They're not letting SOFAZ pay for anything.

[Azad]

Re: Energy in Azerbaijan

They have the funds to pay their debt but decided to take the lower credit rating and screw their bond holders.

"Creditors Cry Foul After Default as Azeri Bank Offers Debt Swap

Investors dismayed at being forced to accept a 20 percent principal writedown in a debt restructuring of Azerbaijan’s biggest bank were met with a warning that it may be shut down if creditors fail to back the plan, with the finance minister saying the lender never had the benefit of full sovereign guarantee.

“Creditors are very angry about the haircut,” said Lutz Roehmeyer, who manages about $2.2 billion including IBA bonds at Landesbank Berlin Investment and plans to vote against the plan. “This proposal shows the unwillingness to pay of the sovereign while at the same time having the full ability to pay. This will make funding long term costlier to Azerbaijan.”"

https://www.bloomberg.com/news/articles/2017-05-23/defaulted-azeri-bank-offers-swap-into-sovereign-debt-new-bonds

[Azad]

Re: Energy in Azerbaijan

If you could copy and paste the full article, thad be great

Unfortunately it is subscription base (WSJ).

I don't have a subscription to WSJewrnal. In few days it will be available on 3ed party sites.

[HyeSocialist]

Re: Energy in Azerbaijan

Unfortunately it is subscription base (WSJ) ... You can tell that it is not looking too good for the azeris.

"Azerbaijan Bank Creditors Balk at Restructuring Plan
Investors argue country may treat them differently, say they were surprised by bankruptcy filing

LONDON—A troubled lender from Azerbaijan is shaping up to be a battleground for U.S. and European investors facing big losses on bondholdings.

State-owned International Bank of Azerbaijan, or IBA, filed for bankruptcy in New York on May 11, battered by bad loans and the oil-price rout. It wants to restructure $3.3 billion of debt to help it get back on its feet, according to a proposal accompanying the bankruptcy filing."

https://www.wsj.com/articles/azerbaijan-bank-creditors-balk-at-restructuring-plan-1495482843

As I mentioned, they are not only sinking they are taking many others with them down.

If you could copy and paste the full article, thad be great

[Azad]

Re: Energy in Azerbaijan

Unfortunately it is subscription base (WSJ) ... You can tell that it is not looking too good for the azeris.

"Azerbaijan Bank Creditors Balk at Restructuring Plan
Investors argue country may treat them differently, say they were surprised by bankruptcy filing

LONDON—A troubled lender from Azerbaijan is shaping up to be a battleground for U.S. and European investors facing big losses on bondholdings.

State-owned International Bank of Azerbaijan, or IBA, filed for bankruptcy in New York on May 11, battered by bad loans and the oil-price rout. It wants to restructure $3.3 billion of debt to help it get back on its feet, according to a proposal accompanying the bankruptcy filing."

https://www.wsj.com/articles/azerbaijan-bank-creditors-balk-at-restructuring-plan-1495482843

As I mentioned, they are not only sinking they are taking many others with them down.

[londontsi]

Re: Energy in Azerbaijan

https://www.independent.co.ug/azerba...ity-games-end/

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The Azeris just spent another couple hundred million entertaining jerking off their big brother and themselves. Nice family.

All this reminds me of .....

.

[HyeSocialist]

Re: Energy in Azerbaijan

https://www.independent.co.ug/azerbaijan-tops-uganda-33rd-islamic-solidarity-games-end/

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The Azeris just spent another couple hundred million entertaining jerking off their big brother and themselves. Nice family.

[HyeSocialist]

Re: Energy in Azerbaijan

Kazakhstan’s beleaguered state pensions fund has found itself the target of a fresh bout of public indignation after losing hundreds of millions in a doomed Azerbaijani investment.

Privately run broadcaster KTK reported this week that managers at the Single Accumulated Savings Fund, or ENPF in its Russian initials, sunk around 70 billion tenge ($224 million) into the International Bank of Azerbaijan. This lender has recently cited liquidity issues as grounds for failing to respect its international liabilities and filed for bankruptcy.

Members of parliament are livid and have accused pension fund managers of incompetence, particularly since there had previously been warnings that the Azerbaijani bank was in trouble.

As economist Rahim Oshakbayev explained, the ENPF acquired bonds issued by the International Bank of Azerbaijan in October 2014, a full five months after an international ratings agency had downgraded the papers to Ba3, a high-risk speculative category. Oshakbayev said that even at the time analysts were warning against the investment, deeming the bonds essentially junk. The bank was downgraded even further, to B1, in February, a move that presaged its inevitable default. All the same, the ENPF stuck to its guns.

The former chairman of the Association of Pension Funds, Aidar Alibayev, told KTK that the likelihood is high that the money invested by ENPF will be lost for good as the whole process has gone too far down the road.

Oshakbayev was coruscating about the ENPF, arguing that the fund’s managers appear to have trouble just holding onto financial assets, let alone expanding them. He estimates that around 20 percent of the ENPF’s capital has been waylaid into junk investments.

The ENPF is bumbling from one scandal to another.

http://www.eurasianet.org/node/83606

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Can someone please call the president of Kazakhstan and tell him that this is what he gets for straight up aligning himself with someone as crooked as Aliyev? These morons deserve each other. I am really upset that this is the club we are part of. We're better off doing business with the Gulf Arabs than we are with these Soviet washups.

[Vrej1915]

Re: Energy in Azerbaijan

Azerbaijan: Racing to Develop Natural Gas Potential
May 4, 2017, by Marika Karayianni

http://www.eurasianet.org/node/83461

Back in 1994, when the so-called “Contract of the Century” was signed, forming an international partnership to develop the giant Azeri-Chirag-Guneshli (ACG) oil field, lots of experts believed that Azerbaijan would not have to worry about money for a long time.

But just 23 years later, Azerbaijan’s government finds itself wrestling with revenue dilemmas. Today, Azerbaijan still holds roughly 7 billion barrels of proven oil reserves and produces 841,000 barrels on a daily basis. Yet that volume represents a significant drop from peak output of 1.1 million barrels a day in 2010. Lower yields, rising concerns about the depletion of reserves and falling world oil prices have sent Azerbaijan searching for alternative sources of revenue.

Baku’s chief hope is to develop its natural gas potential.

According to conservative estimates, Azerbaijan sits atop 1.3 trillion cubic meters of gas and condensate, most of it in the offshore Shah Deniz field, which is believed to be among the largest in the world.

Production there began in 2006, and is expected to increase significantly during the second development phase, currently underway. Azerbaijan’s ambition is to supply natural gas through Turkey, Greece, and Albania to Italy and the rest of Europe – via the planned Trans-Anatolian (TANAP) and Trans-Adriatic (TAP) pipelines that will form the Southern Gas Corridor.

Deliveries are scheduled to begin in 2018, with around 4 billion cubic meters (bcm) per year slated for the Georgian and Turkish markets. The plan is to then expand this volume to 12 bcm a year in 2019, and finally to a full capacity of 16 billion cubic meters a year in 2020, 10 bcm of it headed for Europe.

But even the boost from Shah Deniz exports is not projected to be enough to place Baku on sound financial ground. The ultimate success of Azerbaijan’s effort to emerge as a global natural gas power rests with new offshore exploration.

One recent discovery, announced in 2010, is the Umid gas field in the south Caspian Sea, estimated to contain 200 billion cubic meters of gas and 40 million tons of condensate; the country’s state energy company, SOCAR, has been producing gas there since 2012, and has recently finished drilling the third well.

Also of great promise is the adjacent Babak field, yet to be developed, with potential gas reserves of 400 billion cubic meters, plus 80 million tons of condensate. Further off the coast, the Shaxxx-Asiman field holds an additional 300 billion cubic meters of gas, which Azerbaijan plans to extract in an equal-share partnership with BP. (This field may contain oil too, according to a seismic survey.) And another offshore deposit, Nakhichevan, is being jointly explored with the German company RWE.

The difference-maker for Azerbaijan’s ambitions as a gas exporter is the Absheron field, discovered in 2011. This field’s development, currently in its first phase, could greatly boost potential supplies (its reserves are estimated at 350 billion cubic meters of gas and 45 million tons of condensate) capable of filling Europe-bound pipelines of the Southern Corridor. This could bolster Europe-bound flows from the Shah Deniz field, and ease concerns that the European Union might have over future supplies. All in all, according to SOCAR’s strategy document, these steps could expand Azerbaijan’s gas export volumes to a massive 40 bcm per year.

The problem is that this will not happen until 2025 at the earliest, and in the meantime, Azerbaijan has several challenges to overcome.

More importantly, it will be at least five years before Azerbaijan begins to see its anticipated windfall from natural gas. The Absheron field will not start producing until late 2021 or early 2022, and the first gas deliveries from Shah Deniz will not reach Europe until 2020 or later.

For Baku, it may be a race against time. At present, Azerbaijan faces a gas shortage. It needs 12 billion cubic meters to satisfy its own domestic demand, and in 2016, it was forced to import around one-tenth of it from abroad. In fact, in the first five months of that year, SOCAR’s gas production had actually decreased by 5.4 percent compared to the same period in 2015. The fall triggered new discussions with Gazprom over potential gas imports from Russia, on the order of 3 bcm to 5 bcm per year, with Baku asking Moscow for a discount.

Combined with low oil prices, this shortfall translates into a pressing cash flow problem. Azerbaijan has already had to borrow money – around $5 billion – from international financial institutions to fund its share of Southern Corridor construction costs. It has also sold $1 billion worth of Eurobonds, and is preparing to sell more, in addition to securing a $400 million loan from the World Bank. When it comes to the TAP project, where Azerbaijan is responsible for 20 percent of the costs, the EBRD has confirmed talks to provide about $550 million in direct financing and to attract another $1.1 billion from commercial banks.

Azerbaijan’s high construction expenses are somewhat offset by the falling world price of steel, which is needed for pipelines; Baku has saved $2 billion on TANAP alone. But its budget is still strained, forcing it to prioritize some energy development projects over others. This will likely leave it focused on the Shah Deniz field and the Southern Gas Corridor initiative, while other projects that have no foreign partners –including the Umid and Babak gas fields – risk falling behind. Absheron will probably stay on track, thanks to the involvement of France’s Total.

This set of problems might soon have repercussions for Azerbaijan’s domestic politics. The country’s sovereign wealth fund SOFAZ – long a cornerstone of its energy development efforts – is being rapidly depleted. It stood at a modest $64 million in 2016, a big drop from $323 million in 2015 and $523 million in 2014. This trend is likely to continue as Azerbaijan pursues its natural gas ambitions, and it might not be long before its people feel the effects on their livelihoods. Baku can only hope that its natural gas reaches Europe before then.

Editor's note: Marika Karayianni is a Caspian energy expert based in Athens, Greece.

[Vrej1915]

Re: Energy in Azerbaijan

Debt-Troubled Azerbaijan Spending Big on Islamic Games, Formula 1 and Mariah Carey
May 18, 2017, by Giorgi Lomsadze

http://www.eurasianet.org/node/83646

Just as its largest, government-owned bank defaults on its liabilities, Azerbaijan is shelling out on grand, lavishly mounted sports events and international celebrities, with no end in sight.

The Islamic Solidarity Games, a ten-day, multi-sport competition fashioned as the Olympics of the Muslim world, kicked off in Baku on May 12. It was a glamorous opening, complete with singing, dancing, fireworks, horses, camels and donkeys. A day earlier, it transpired that the International Bank of Azerbaijan (IBA), kept on life support by the Azerbaijani government, could not meet payments on dollar-denominated debt.

The IBA, the nation’s largest lender, asked foreign creditors to accept its plan to restructure $3.3-billion in debt, and sought US court protection from creditors while it tries to work its way out of debt.

Earlier this year, the Azerbaijani government increased its stake in the struggling bank from roughly 82 percent to just over 91 percent, after the finance ministry paid 600 million manats ($353 million) to expand its own holding.

The bank’s proposed debt-restructuring plan appears to involve the state itself picking up its foreign-currency obligations.

That raises questions about other burdens the state is carrying. And how it’s spending its money.

2015 was the year when oil prices took a dive and the country’s hydrocarbons-based economy began to contract. From January through April this year, its GDP growth rate stood at a negative 1.2 percent.

Oil prices have rebounded slightly since 2015, but the country still struggles with a depreciated national currency, reduced state spending and bad debt.

These factors, though, have not affected President Ilham Aliyev ’s enthusiasm for Azerbaijan playing the generous host to international sports events.
Before the Islamic Games, there were the European Games and a Formula 1 race in between. All of them cost top manat to Azerbaijani taxpayers, who saw much of their savings wiped out by the 2015 collapse in the manat’s value.

The “Islamic Olympics” cost Azerbaijan $100 million; Formula 1 less than $150 million; and the “European Olympics” $600 million in 2015, according to Sports Minister Azad Rahimov.

So far, the return on investment appears to be calculated primarily in PR.

For past events, to help that along, Baku booked global celebrities like Lady Gaga, Pharrell Williams and Enrique Iglesias. Mariah Carey is set to headline the next, another Formula 1 race in Baku this June.

The cost for Carey’s performance has not been announced, but past media reports have put the estimated price tag for her appearances at around $3 million.

What Carey or Formula 1 can do to boost confidence in Azerbaijan’s banking sector is not clear.

Within Azerbaijan there is very little room left for voicing criticism of state-financed showbiz and sports arrangements, but many Azerbaijanis complain privately or in online forums about their government’s fixation on extravaganzas amidst an economic slump.

In one online debate about the expediency of such spending, users sarcastically suggested looking on the bright side: “But think of all the selfies, check-ins, hashtags, the glamor.”

None of this criticism is reflected in Azerbaijan’s mostly state-controlled or allied media. It opts instead to focus on the success of Azerbaijani athletes – as of now, 50 gold medals at the Islamic Games, and counting.