While many oil producers part of the OPEC/non-OPEC agreement to curb production have already stated their support to the deal extension for another nine months, Kazakhstan is going into next week’s meeting with little enthusiasm for rolling over its production cuts, as it plans to raise output from its major oil fields.
Kazakhstan’s Energy Minister Kanat Bozumbaev said earlier this week that his country would attend the meeting at which OPEC and partners are expected to hammer out the details of the cuts extension.
In the deal from November 30, OPEC pledged to cut 1.2 million bpd of its production, while Azerbaijan, Bahrain, Brunei Darussalam, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Republic of Sudan, and Republic of South Sudan committed to a collective cut of 558,000 bpd.
At that time, Kazakhstan promised to cut output by 20,000 bpd from an average 1.5 million bpd, Radio Free Europe says.
According to Bloomberg, Minister Bozumbaev has said that his country won’t automatically roll over the cuts it is implementing now.
Kazakhstan is seeking to increase production at its giant fields, especially Kashagan, which after years of delays and setbacks, resumed commercial-scale production in October 2016 at a rate of 90,000 bpd. In January, the company operating the field said that it was ramping up production to 180,000 bpd.
Just days before Saudi Arabia and Russia said that they agreed that the production cuts should be extended by nine months to March 2018, Bozumbaev said that Kashagan currently produces 140,000-150,000 bpd, and output would rise to 200,000 bpd in the second half of the year, and possibly to 300,000 bpd at the end of the year.
But the minister noted that it’s important for Kazakhstan that the price of Brent not drop below US$50 per barrel. The country’s budget is based on a US$50 Brent price, and therefore Kazakhstan will discuss the possibilities of an output cut extension.
A recently approved expansion at another field, Tengiz, plans for production to increase by some 260,000 bpd, to around 850,000 bpd.
Given its ambitious plans to grow production, Kazakhstan may be reluctant to sign up to cutting its output for another nine months.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…