Crude Oil, Maritime & Shipping

November 25, 2024

Kazakhstan lowers 2024 oil production target after H2 maintenance

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HIGHLIGHTS

Unplanned outages, OPEC+ commitments also hit output

Kazakhstan struggles to comply with OPEC+ crude quota

Country mulls increasing exports via BTC pipeline

Kazakhstan has cut its forecast for oil production in 2024 after major maintenance at the Tengiz and Kashagan fields in the second half of the year, Energy Minister Almasadam Satkaliyev said Nov. 25.

During an address to parliament, Satkaliyev said Kazakhstan's commitments under the OPEC+ agreement had also affected output in 2024, according to a ministry post on Instagram.

Kazakhstan now expects to produce 88.4 million mt of oil in 2024, equivalent to around 1.77 million b/d. Satkaliyev previously said that Kazakhstan was targeting an output of 90.3 million mt in 2024, equivalent to around 1.81 million b/d. Production in the first 10 months of the year totaled 73.5 million mt.

He added that unplanned maintenance at the Karachaganak field and limited intake at the Orenburg gas processing plant had also affected output.

Kazkahstan plans to increase oil production to over 100 million mt/year from 2026, due to development of large projects Tengiz, Kashagan and Karachaganak which account for around 65% of overall oil production, Satkaliyev said.

OPEC+ issues

Kazakhstan has repeatedly produced above its OPEC+ crude production quota, leading to discord in the alliance and putting pressure on Kazakhstan to compensate for overproduction.

Satkaliyev said Kazakhstan remained committed to the agreement.

"Fulfilling the conditions of the agreement is necessary to maintain stability in the global oil market," he said.

Kazakhstan has relied heavily on maintenance at its major fields to bring it closer to quota, posting large cuts in output in August and October.

Kazakhstan is one of eight producers implementing voluntary cuts totaling 2.2 million b/d. The full OPEC+ group meets Dec. 1 to decide whether to amend current plans to bring some of these barrels back to market from January 2025.

Ministers face challenges, including uncertainty over Chinese demand, strong output outside the group and geopolitical uncertainty as they develop a policy for 2025 that will support prices. Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $76.12/b Nov. 22 -- well below 2024 peaks of $93/b in April and most producers' fiscal breakeven oil prices.

Export options

Growing production is driving Kazakhstan to look for additional export capacity. Satkaliyev said that the country is considering increasing supplies via the Baku-Tbilisi-Ceyhan pipeline from current levels of 1.5 million mt/year to 20 million mt/year.

He said that the Baku-Tbilisi-Ceyhan route is one of the most promising options, as both Kazakhstan and Azerbaijan are interested in increasing flows.

Kazakhstan is also considering supplies via the Baku-Supsa pipeline, with possible volumes up to 3 million mt/year, Satkaliyev said.

Kazakhstan plans to export 68.8 million mt of oil in 2024. This includes 55.4 million mt via the Caspian Pipeline Consortium, which runs via the Russian Black Sea port of Novorossiisk. It also plans to ship 8.6 million mt via Atyrau to Samara, 3.6 million mt to Aktau, 1.1 million mt to China and .05 million mt via rail, according to the ministry.


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