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Caspian Sea news roundup

The countries surrounding the Caspian Sea have mostly been focused on one goal recently: tackling low oil prices. Many nations are looking for a way to boost profits, leading to some creative suggestions that could well pay off in the future.

Some nations are looking to boost the volume of their exports to make up for the lower prices, while others are more interested in investing in technology. Azerbaijan is moving more into the business of international oil trading in a bid to make the global market more favourable to it.

These methods are risky, but could end up giving each nation a significant boost should they pay off. Here are the top stories from the last week:

 

Kazakhstan cuts oil export duty

In a bid to boost the oil industry, Kazakhstan's government announced on March 19th that export duty on the resource would be reduced. It is hoped that this will provide much-needed help to a sector that has been hit hard by the drop in global oil prices by making it cheaper for businesses to trade overseas.

Oil export duty has been dropped from $80 to $60 per metric ton. The duty on heavy distillates, gasoil, liquid fuel, black oil, lubricants, bitumen, residues of petroleum oils and oils obtained from bituminous minerals has also been reduced to $60 per metric ton, but this drop is much steeper as the previous price was $112.59 per metric ton.

This is based on an average price of $540 per metric ton. However, over the last year oil prices dropped from around $720 to $360 per metric ton. The Kazakh government has warned that if prices drop as low as $138.60 per metric ton, oil exporting will no longer be an economically viable option.

 

More collaboration in Russia and Kazakhstan's future?

The members of the Eurasian Economic Union may be working more closely together in the future in order to boost the oil industry in the wake of falling prices. Speaking in Astana, Kazakh president Nursultan Nazarbayev said that the union was "now being tested by great challenges, because export prices have fallen".

However, he added that working together with Russia was the key to success. Vladimir Putin at the same event said that collaboration with Kazakhstan would "help us overcome the difficulties", while Mr Nazarbayev added: "Measures have been taken and everything has now been stabilized."

While relations are slightly frayed between the two countries, the words of their leaders suggest that greater collaboration could be on the horizon, specifically in the oil and gas industry.

 

Iran proposes oil and gas transit deal to Turkmenistan

A new pipeline deal could be on the horizon for Turkmenistan, as it has been proposed that the nation transit Iranian oil and gas across its borders to countries such as Pakistan. Iran's president Hassan Rouhani said: "Our countries are among the largest oil and gas producers and the partnership in this sphere will be significantly expanded in the future."

 

Azeri oil industry sees improvement

Some good news has been seen in the Azeri oil industry, as the nation has been exporting a significantly larger amount of the resource in the last few months. The latest figures show that 5,504,510 tons of oil was exported by Azerbaijan in January and February, most of which travelled through the Baku-Tbilisi-Ceyhan pipeline.Baku-Tbilisi-Ceyhan pipeline.

This is a year-on-year rise of 3.7 per cent, as Azerbaijan exported around 5.3 million tons of oil in January-February 2014. This has been caused by an increase in oil outputs, especially at the Azeri, Chirag and Guneshli (ACG) oilfields. In total, the nation produced 6.95 million tons of crude oil and condensates in the first two months of 2015, compared to 6.90 million in the same period last year.

In total, almost four-fifths (78.9 per cent) of Azeri oil was exported through the Baku-Tbilisi-Ceyhan pipeline. Around 13 per cent travelled through the Baku-Supsa pipeline via Georgia, and just under five per cent was exported through the Baku-Novorossiysk pipeline via Russia.Baku-Supsa pipeline via Georgia, and just under five per cent was exported through the Baku-Novorossiysk pipeline via Russia.

 

SOCAR expands in London

SOCAR Trading, an extension of the Azeri state-owned oil company formed in 2007, has announced that it will be recruiting Phibro's London trading team. This will enable the company to play a larger role in the international oil trading business, adding to the company's current offices in Geneva, Dubai and Singapore.

Arzu Azimov, CEO of SOCAR trading, said: "SOCAR Trading takes another step in its development by entering the Brent/BFOE market with such an experienced team. It has long been our company strategy to expand our geographical presence and to diversify our trading portfolio. This latest step reinforces SOCAR Trading's position as a truly global and progressive player."

 

Will hi-tech refineries boost the Kazakh oil industry?

Murat Abulgazin, the senior analyst at the Kazakh Investment Profitability Research Agency, has come up with a plan to increase the profitability of Kazakhstan's oil industry. Rather than boosting exports of crude oil, the expert said, it would be better for the nation to invest in hi-tech refineries in order to benefit from exporting products with less volatile prices.

"Market prices will always fall and rise with various amplitudes," Mr Abulgazin told Trend. "Deep oil refining and petrochemicals are always economically profitable and are a kind of protection from changes in the raw materials market." As such, it might be wise for Kazakhstan to invest in the technology needed to refine large amounts of crude.
More geological exploration is also necessary, according to Mr Abulgazin.


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