Caspian Business Journal

Weekly Round-Up: December 14 – 18

A weekly review of events in the Caspian region. This week: The strategic implications of the Turkmenistan-China pipeline. Kyrgyzstan‘s tobacco industry sees a slump,  Azerbaijan looks to purchase defense products, while Fitch reviews Kazakhstan‘s ratings.

Turkmenistan

China has broken Russia’s monopoly on Turkmen gas, with the opening of the Turkmenistan-China pipeline, reports Asia Times. The pipeline is the first high-volume export route from Turkmenistan that does not go through Russia. The Jamestown Monitor also examines the strategic implications of the new line. Not only does the new route undermine Russia’s leverage with Turkmenistan in negotations about the resumption of Turkmen gas to Russia, but it also hinders Russia’s bid to export gas from eastern Siberia to China, given the appearance of this new competitor.

EBRD is providing a $2.7 million loan to Altyn Aylag, a private brewery operating in Turkmenistan in order to help the company expand capacity, according to Finchannel.com. The loan will help the brewery to more than double production from 16,000 liters a day to over 36,000 liters, and to diversify the flavors of beer.

Turkmenistan.ru reports on the opening of the first international automobile exhibition in Ashgabat on Friday, with participation from automobiles manufacturers from around the world. In his opening address, the President of Turkmenistan expressed hopes that the event will lead to increased contact with companies interested in joint projects, and for the further expansion of cooperation between Turkmen and foreign entrepreneurs in the road transport sector.

Kyrgyzstan

A recent study by Kyrgyzstan-based consulting agency M-Vector, has concluded that trade relations between the U.S. and Kyrgyzstan remain substantially underdeveloped. News Agency 24.kg reports that the number of bilateral deals remains low, with the U.S. accounting for between 0.5 and 0.8 percent of Kyrgyz annual trade turnover.

Kyrgyzstan’s tobacco industry is suffering from a severe slump as it it now uncompetitive in external markets according to Member of Parliament Nurlan Koichubakov, and quoted by 24.kg.  Previously the republic produced about four billion cigarettes and about 65 thousand tons of tobacco a year. Now Reemtsma [the only Tobacco manufacturer in Kyrgyzstan] outputs only 3.5 billion cigarettes and 10 to 12 thousand tons of tobacco,” Koichubakov added.

Azerbaijan

APA interviews Azerbaijan’s Minister of Defense, Yaver Jamalov, on developments in the defense sector. Jamalov highlights plans to buy modern technologies from developed countries for the production of eight kinds of defense products in 2010. He also draws attention to the construction of a ship building plant near Baku.

News Agency Aysor.am reports that the World Bank is to provide $450 million loan to Azerbaijan for a number of railroad reconstruction projects in the country. The project will include improvements on the stretch of track between Baku-Boyuk-Kesik.

Kazakhstan

Finchannel.com reports that Fitch ratings has affirmed Kazakhstan’s long-term foreign currency Issuer Default Rating (IDR) at BBB-, its long-term local currency IDR at ‘BBB’, and has revised the outlooks on both ratings to stable from negative a. According to Andrew Coluhoun, director of Fitch’s Sovereigns Group, “higher oil prices and capital inflows are boosting official reserves, strengthening the sovereign’s balance sheet and further supporting the Stable Outlook.”

According to World Nuclear News, Canadian-based Uranium One has completed it’s purchase of a 50% stake in one of Kazakhstan uranium mines. The Karatau project mines the southern part of the Budenovskoye orebody in the northern group of mines in the Chu-Sarysu basin of southern Kazakhstan. The mine in question, known as Budenovskoye 2, started production last year.

According to Bloomberg, creditors of Alliance Bank, Kazakhstan’s second- biggest lender to default this year, have approved a plan to restructure 677 billion tenge ($4.5 billion) of debt. The bank originally defaulted back in April when it was found that $1.1 billion of liabilities that weren’t reflected on its balance sheet. Restructuring is expected to be completed by March 1, 2010.

Armenia

Arka news agency reports that Armenia is likely to accede to the World Trade Organization’s Agreement on Government Procurements in late 2010. Signatories of the agreement concur that suppliers of goods and services in other signatory countries will be treated no less favorably than domestic suppliers in procurement covered by the Agreement, and that laws, regulations and procedures relating to government procurement will be transparent and fair.