Kazakhstan’s oil production has reached a record high, despite challenges with its key export route, the Caspian Pipeline Consortium (CPC), which was recently damaged. On February 19, the country produced 2.12 million barrels of oil per day (bpd), including gas condensate, according to official data.
The CPC, which carries more than 80% of Kazakhstan’s oil exports, saw its capacity reduced by 30-40% following an attack by Ukrainian drones, as reported by Russia this week. However, it is unclear how Kazakhstan has managed to boost its production despite these export constraints.
This increase in output is largely attributed to higher production at the Tengiz oilfield, one of the largest in the country. Tengizchevroil, a consortium led by Chevron, is overseeing a massive $48 billion expansion project at the field.
Kazakhstan is also exploring alternative export routes. Last month, Reuters reported that the country could significantly increase oil exports through Turkey’s Ceyhan port, reducing its reliance on Russia. Kazakhstan’s Energy Minister, Almasadam Satkaliyev, mentioned that oil shipments via the Baku-Tbilisi-Ceyhan (BTC) pipeline could rise to 20 million metric tons annually, up from the current 1.5 million, as the nation boosts its oil production.
Despite the record output, Kazakhstan may have to reduce production later to make up for overproduction in 2023. Last year, Kazakhstan, Russia, and Iraq submitted compensation plans to OPEC for the excess crude pumped in the first half of 2024. OPEC plans for these countries to compensate for overproduction through production cuts from April 2024 to September 2025. Kazakhstan’s share of the compensation is 620,000 bpd, while Russia and Iraq’s contributions are 480,000 bpd and 1.18 million bpd, respectively.
Traders are concerned that the restored output from OPEC+ countries, combined with higher non-OPEC supply, could lead to an oversupply in the market. However, analysts at Standard Chartered have noted that OPEC+ has assured that any cuts will depend on market conditions, suggesting that adjustments will be made accordingly.
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