Kazakh Minister Sees Higher March Oil Output, Questions OPEC Cuts
Kazakhstan’s energy minister, Kanat Bozumbayev, has again cast doubt on the country’s commitment to cut oil output under an agreement with OPEC, telling state media that March output was again likely to be on the high side and suggesting the trajectory of production was upward.
The comments, carried by state news agency Kazinform, came after Kazakh officials failed to attend a meeting in Kuwait over the weekend intended to discuss last November’s agreement between OPEC and non-OPEC producers on reducing output, and a possible extension beyond its six-month term.
Speaking to reporters after a government meeting Tuesday, Bozumbayev highlighted methodological problems with calculating countries’ compliance and said output from two of Kazakhstan’s ‘super-giant’ fields, Karachaganak and Kashagan, would increase, according to Kazinform.
Asked by how much Kazakhstan intended to cut its output, Bozumbayev said: “It is not a question of how much. We can only increase.” He attributed recent fluctuations in production partly to seasonal factors.
“We, let us say, in January over-fulfilled our commitment — the cut was more than 20,000 b/d — in February a little less. In March, our production will be a bit higher. In April I expect, with the warmer weather, production will fall,” Bozumbayev said.
“This is due to various factors, including climactic ones, and how the oil fields in various parts of the country behave, depending on their stage of exploitation. Many of our large fields are reducing their output, in total by a million mt a year, because they passed their peak.”
Bozumbayev has previously described as symbolic Kazakhstan’s obligation under the agreement to cut its production by 20,000 b/d. Kazakh compliance is complicated by recent increases in output from the giant Kashagan field, which came on stream last October after a decade’s delay.
Even accounting for declining production from mature fields, it is unclear whether Kazakhstan’s participation in the November deal will square with the output of the country’s three main oil exporting fields.
The Karachaganak, Kashagan and Tengiz fields are unlikely to be subject to any government-mandated cuts, being managed by international consortia.
Output from Tengiz, the largest producing oil field, increased by 1% last year to slightly above its nameplate capacity of 600,000 b/d, or 35% of total Kazakh production, and in the first half of 2016 was considerably higher.
While production figures for March have yet to be published, the country’s crude and condensate output rose to 1.72 million b/d in February.
Last November’s agreement, spearheaded by Russia and Saudi Arabia, obliges Kazakhstan to cut output by 20,000 b/d for six months, from a November production level of 1.7 million b/d.
However in January Kazakhstan earned itself some latitude as its production was 30,000 b/d below November levels.
Calculating compliance is complicated by the need to convert from tons, the standard measure of oil output in Kazakhstan, to barrels.
by Nick Coleman, Edited by Dan Lalor, London (Platts)