Kazakhstan supports extending OPEC production cuts

Kazakhstan is sticking to its plans to increase oil output next year, potentially further escalating tensions with its OPEC+ partners.

“I order the Ministry of Energy to step up efforts to increase the production of natural gas and oil,” Prime Minister Olzhaz Bektenov said at a government meeting in Astana on Tuesday. He said the Department of Energy needs to ensure that oil production reaches planned levels in 2025.

Central Asia’s largest oil producer announced in August that it was targeting oil production of 97.2 million tonnes in 2025. Since the figures were released, there has been a major shift in OPEC+’s production policy, which means production in member countries will be suppressed for much longer than expected.

In a bid to boost global oil prices, producer groups have agreed to postpone the planned production recovery for the third time from January to April. The company also plans to slow down the pace of monthly production increases, if they eventually begin, and fully roll back production cuts a year later than originally planned.

Kazakhstan is already under pressure from the leaders of OPEC+, Russia and Saudi Arabia for failing to meet the percentage of production cuts it promised in early 2024. The country has also failed to deliver on its promise to make additional production cuts to compensate for the initial cuts. Overproduction.

Astana can increase oil production thanks to the $48.5 billion development of the Tengiz field, led by Chevron, with pumping scheduled to begin in the second quarter of next year.

Oil production plans in the country’s budget show an increase of 9.4 million tonnes, or about 190,000 barrels per day, next year. However, according to the latest agreement between the Organization of the Petroleum Exporting Countries and its allies, Kazakhstan should increase production to no more than 41,000 barrels per day in 2025, and probably even less given remuneration cuts. will also decrease.

Kazakhstan’s production plans do not always come true. Production this year is currently expected to reach 87.8 million tonnes, revised down from the originally planned 90.3 million tonnes, Energy Minister Almasadam Satkaliev said at a meeting on Tuesday. Last year, the Ministry of Economy predicted that oil production would reach 95.4 million tons in 2024.

This shortage, combined with falling oil prices, is putting pressure on the country’s economy. Deputy Prime Minister Nurlan Baybazarov said last month that state budget revenues would be 2 trillion tenge ($3.8 billion) lower than previously expected. The country had to tap into the National Petroleum Fund to fill the gap, increasing inflationary pressures.

The International Monetary Fund said in October that Kazakhstan “needs urgent action to strengthen its fiscal policy framework.”

Comments are made by readers and comments contained herein do not reflect the views or opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate, or offensive comments will be deleted.