Kazakhstan’s oil output has surged to a record high despite damage to the Caspian Pipeline Consortium (CPC), its main export route via Russia. Kazakhstan’s oil and gas condensate production clocked in at 2.12 million barrels per day (bpd) on February 19, the sources said, citing official data. Russia reported this week that CPC capacity was cut 30-40% after an attack by Ukrainian drones. It’s not clear how Kazakhstan has managed to ramp up output despite having constrained export capacity. ?azakhstan relies on CPC for more than 80% of its exports. The surge in output follows a rise in production at the giant Tengiz oilfield, operated by Tengizchevroil, led by Chevron Corp. (NYSE:CVX), which has embarked on a $48 billion expansion of Tengiz.
Last month, Reuters reported that Kazakhstan could sharply increase its crude oil exports out of Turkey’s port of Ceyhan, and dramatically reduce the more than 80% share of flows it currently sends via Russia. According to Kazakhstan Energy Minister Almasadam Satkaliyev, exports via the Baku-Tbilisi-Ceyhan (BTC) pipeline could increase to 20 million metric tons a year from the current 1.5 million as the country increases oil production.
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However, Kazakhstan could later cut oil production to compensate for past overproduction. Last year, Kazakhstan, Russia and Iraq submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. According to OPEC, the entire over-produced volumes were to be fully compensated over the next 15 months through September 2025, with Kazakhstan ‘paying back’ a cumulative 620 kb/d, Russia 480 kb/d and Iraq 1,184 kb/d. Many traders are worried that the balance of oil demand growth and non-OPEC+ supply growth might not offset the scale of restored OPEC+output, leaving oil markets oversupplied when OPEC+ starts scaling back oil production cuts in April. However, commodity analysts at Standard Chartered have pointed out that this view ignores repeated assurances from OPEC+ that the tapering would be fully dependent on market conditions.
By Alex Kimani for Oilprice.com
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