Algerian Parliament Endorses Spending Cuts
Algeria's lower house of parliament endorsed a 2017 budget that includes new taxes on goods and fuel subsidy cuts as part of government efforts to offset a fall in energy revenues.
Next year's budget provides for a 14 percent cut in spending, following a 9 percent reduction in 2016, as the OPEC member remains cautious about any recovery in global oil prices.
Oil and gas account for 94 percent of exports and 60 percent of the state budget. Attempts to diversify the economy have largely failed.
The budget is widely expected to get final approval from the Algerian Senate.
Lower oil prices have hit state finances hard. Authorities have used hydrocarbon revenues to subsidize almost everything from food to fuel and medicine to maintain social stability under President Abdelaziz Bouteflika, in power since 1999.
"There are certainly increases (in taxes) ... but, on the other hand, there are a lot of provisions that are there to improve, boost and enhance economic growth," Finance Minister Hadji Baba Ammi told parliament.
Under the new finance law, prices for unleaded gasoline, premium gasoline and regular gasoline will increase by 13.08 percent, 12.94 percent and 14.11 percent per liter, respectively and the diesel price by 7.85 percent.
Earlier this year Algeria began to implement its first fuel price increases in more than a decade, though domestic prices for energy products remain very low by international standards. Diesel is currently 18.23 dinars a liter (16 U.S. cents).
The new budget provides for a rise in value-added tax (VAT) of 2 percent, while taxes on domestic property rentals will increase by between 7 and 10 percent and tobacco prices by between 60 and 100 percent.
Prices for appliances such as air conditioners and washing machines will go up by between 5 and 60 percent, and the cost of advertising for foreign products by 10 percent.
Lawmakers also approved a new 10 percent tax on alcoholic beverages. But they gave the green light for a 65 percent reduction of electricity bills for residents and farmers in southern desert provinces.
Opposition lawmakers, who represent a small minority in parliament, boycotted the budget vote. Some held up placards in parliament that read: "Starving the people" and "Undermining the social nature of the state".
"The government is blaming citizens for its mistaken policies over the past two decades. It has punished citizens several times," said Lakhdar Benkhellaf of the opposition Justice and Development party.
The government expects energy revenues to reach $35 billion in 2017, up from a projected $26.4 billion this year.
Russia LNG Giant Seeks Japanese Partnership in Arctic
Russian natural gas giant Novatek expects Japan Inc. to lend a hand in its Arctic Circle liquefied natural gas business, CEO Leonid Mikhelson said in an interview with The Nikkei.
Novatek's LNG business is expected to be a core part of the eight-point economic cooperation plan between Japan and Russia.
Novatek is planning a new large-scale project known as Arctic LNG 2, which targets annual production of 12 million to 16 million tons of LNG, with operations aimed to start by 2025. Mikhelson expressed a desire to see Japan be a cooperative partner at every step of the plan, from gas production to liquefaction plant construction and management, all the way to sales. It was also made clear that should Japanese enterprises cooperate, the country could expect a portion of the output.
The participation of Japanese enterprises in the gas project would go a long way toward fulfilling the energy portion of the eight-point cooperation plan, Mikhelson said. The Japan Bank for International Cooperation, or JBIC, is considering a jointly financed loan with European financial institutions, totaling 1 billion Euros ($1.05 billion), to a current Novatek Arctic project called Yamal LNG. Mikhelson believes that the best way forward, and a doable goal, would be for the loan to be definitively agreed upon in time for Russian President Vladimir Putin's visit to Japan Dec. 15-16.
Japan and Russia have agreed to prioritize implementing roughly 30 areas of economic cooperation by Putin's visit. Mikhelson's statements hinted at the possibility that LNG projects involving Novatek could well figure into these 30 priorities.
Kashagan Oil Field Starts Commercial Output
The Kashagan oil field has started commercial output, Kazakhstan's energy minister said, marking a milestone for $55 billion project which is more than a decade behind its original production plan.
The offshore field in the Caspian Sea has produced about 0.5 million tonnes (3.8 million barrels) of oil since test pumping began on Sept. 28, Kanat Bozumbayev told parliament, and daily output has exceeded 75,000 barrels since Nov. 1.
Kashagan has recoverable oil reserves estimated at 9-13 billion barrels and is one of the world's biggest discoveries in the last 40 years, according to the Kazhak oil ministry.
The former Soviet republic expects Kashagan to produce up to 1.1 million tons of oil this year and 4.0-8.0 million tonnes next year, helping to offset declines at mature fields in the country.
Discovered in 2000, the field was named after a 19th century Kazakh poet, Kashagan Kurzhimanuly. With its production difficulties, the field has lived up to its name which means "restive, uncontrollable."
Production, originally due to begin in 2005, did not start until 2013 and then was halted shortly afterwards due to technical problems with gas pipelines.
Costs have also ballooned. The initial estimate was $57 billion for the project's 40-year lifetime, but it has already cost about $55 billion to develop, according to analysts' estimates.
The NCOC consortium developing Kashagan comprises China National Petroleum Corp, Exxon Mobil, Eni, Royal Dutch Shell, Total, Inpex and KazMunaiGas.
The field is set to ramp up output further during 2017 thanks to reinjection of sour gas into its reservoir, which will increase production to more than 150,000 bpd in 2017 and 230,000 bpd in 2018. Kazakhstan's total production this year is forecast at about 1.6 million barrels per day.
Kazakhstan, whose economy is dominated by oil, is keen to push up production, but further expansion may be delayed if oil prices remain low, some analysts have said.
---SOCAR, Total Sign Gas Field Deal
Azerbaijan’s state oil company SOCAR and French company Total signed a framework agreement on the principles regulating the program of development of the Absheron gas field in the Caspian Sea, SOCAR said in a message Nov. 21.
The agreement was signed following a meeting between SOCAR President Rovnag Abdullayev and Total CEO Patrick Pouyanné in Baku, according to the message.
During the meeting, Abdullayev said the effective cooperation between SOCAR and Total as part of the joint oil and gas projects plays a special role in regional and international energy security.
In his turn, Pouyanné expressed interest in further cooperation with Azerbaijan, which has broad prospects, the message said.
Total follows closely the projects implemented in Azerbaijan and will continue to study new investment opportunities, as well as invest in oil and gas operations in the country, said Pouyanné.
During the meeting, Total expressed intention to take advantage of participation in other oil and gas projects in Azerbaijan, including the development of the potential Umid-Babek structure.
According to forecasts, the first gas from the Absheron gas and condensate field, discovery of which was announced in 2011, will be received in late 2021 and early 2022.
Absheron field’s reserves are estimated at 350 billion cubic meters of gas and 45 million tons of condensate, according to SOCAR.
Participants of the Absheron project are SOCAR (40 percent), and French companies Total (40 percent) and Engie (20 percent).