Kazakhstan pledges OPEC+ fealty even as Tengiz output set to climb

Kazakhstan has no plans to curb the expected production increase from its highest-producing oil field, Tengiz, in 2025, but it is ready to make a "correction" to national production plans if conditions require, energy minister Almasadam Satkaliyev told S&P Global Commodity Insights Sept. 25.

Satkaliyev, on the sidelines of the KIOGE conference in Almaty, reiterated that Kazakhstan will fully implement its OPEC+ obligations, after production earlier in the year at times exceeded quotas. During the conference Kazakh energy ambitions won a vote of confidence from Suhail Mazrouei, energy minister of influential OPEC+ member the UAE, who said his country was keen to invest.

Kazakhstan's patchy compliance with OPEC+ quotas has sparked criticism and pressure from some counterparts, who say quota busting by Kazakhstan and others has contributed to slumping prices. Kazakhstan, along with Iraq and Russia, have been compelled to pledge additional "compensation" cuts, plans that could be complicated for Kazakhstan by the scheduled ramp-up of the Tengiz expansion project.

Satkaliyev said there was cause for "pragmatic optimism" on prices ahead of a scheduled easing of cuts starting in December. On Sept. 5, OPEC+ announced a delay until December in its plans to gradually roll back 2.2 million b/d of voluntary cuts.

Asked about the production increase from the giant Tengiz field expected in the first half of 2025 as a result of a major expansion project led by Chevron, Satkaliyev said there were no plans to revise nationwide output plans. Tengiz crude output is expected to rise by as much as 260,000 b/d in the first half of 2025, to nearly 900,000 b/d, according to Tengizchevroil, the Chevron-led consortium that operates the field.

"At this moment we plan not to make any changes in our production plan for next year, but we're ready for a correction, it depends on market conditions," he told S&P Global Commodity Insights. Asked if such a "correction" would be spread among all producers, he said, "We'll see."

"OPEC+ is a very effective organization, and we, as a member of OPEC+, plan to fully execute our voluntary obligation in order to provide stability on global markets. We're witnessing some trends which give us pragmatic optimism about oil prices. We see increasing consumption of crude oil on the US market and developing markets, and India as well," he said.

OPEC+ is scheduled to start winding down the so-called "voluntary" cuts in December 2024 and continue through 2025. However, recent signs of demand weakness highlighted by OPEC and others have added to nervousness over prices.

Tengizchevroil declined to comment.

OPEC+ politics

Kazakhstan was a founder member of OPEC+ and is regularly among its top 10 producers. While its over-production at times has rankled within the group, it is far from the only member to have struggled on compliance.

Upstream maintenance is thought to have caused the country's production to fall back to within its quota in August, and it has promised to compensate for over-production by September 2025.

The country got a vote of confidence from the UAE energy minister Mazrouei, attending KIOGE. He stressed the UAE is keen to build on earlier investments including tanker purchases by AD Ports to ship oil across the Caspian from Kazakshtan to Azerbaijan -- reducing dependence on the main Russian pipeline out of the landlocked country -- and a planned 1 GW wind power project involving UAE company Masdar.

"We were fortunate as well to work with Kazakhstan in the Caspian in the logistics to move the oil to Azerbaijan and we linked those two countries and used this infrastructure that we have to ensure that the supplies are not interrupted," Mazrouei said. "As a country we want to be an enabler of success, we want to be a partner in oil and gas, but also renewable energy for the region and especially in Kazakhstan."

Kazakh crude output fell 120,000 b/d on the month to 1.45 million b/d in August, according to the Platts OPEC+ survey from S&P Global Commodity Insights published Sept. 9.

The country's flagship CPC Blend crude oil was assessed by Platts, part of S&P Global Commodity Insights, at a 24 cent premium to Dated Brent on Sept. 24.