Kazakhstan has ramped up oil production, with the country’s crude oil and gas condensate–a type of light oil- output hitting a record high of 2.12 million barrels per day in February, good for a 13% increase from January. Excluding gas condensate, crude oil production increased 15.5% m-o-m to 1.83 million bpd.

The OPEC+ member has been able to increase oil output despite damage to the Caspian Pipeline Consortium (CPC), its main export route via Russia. Two weeks ago, Russiareported that that CPC capacity was cut by 30-40% after an attack by Ukrainian drones. It’s not clear how Kazakhstan has managed to ramp up output despite having constrained export capacity. ?azakhstan relies on CPC for more than 80% of its exports. The surge in output follows a rise in production at the giant Tengiz oilfield, operated by Tengizchevroil, led by Chevron Corp. (NYSE:CVX), which has embarked on a$48 billion expansion of Tengiz. Previously, Reuters reported that Kazakhstan could sharply increase its crude oil exports out of Turkey’s port of Ceyhan and dramatically reduce the more than 80% share of flows it currently sends via Russia. According to  Kazakhstan Energy Minister Almasadam Satkaliyev, exports via the Baku-Tbilisi-Ceyhan (BTC) pipeline could increase to 20 million metric tons a year from the current 1.5 million as the country increases oil production.

Kazakhstan has repeatedly exceeded its OPEC+ output quota of 1.468 million bpd. Last year, Kazakhstan, Russia and Iraq submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. According to OPEC, the entire over-produced volumes were to be fully compensated over the next 15 months through September 2025, with Kazakhstan ‘paying back’ a cumulative 620 kb/d, Russia 480 kb/d and Iraq 1,184 kb/d. Many traders are worried that the balance of oil demand growth and non-OPEC+ supply growth might not offset the scale of restored OPEC+ output, leaving oil markets oversupplied when OPEC+ starts scaling back oil production cuts in April. However, commodity analysts at Standard Chartered have pointed out that this view ignores repeated assurances from OPEC+ that the tapering would be fully dependent on market conditions.

By Alex Kimani for Oilprice.com

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