Bloomberg: Kazakh oil producers find themselves in difficult situation because of excessive oil production
![Bloomberg: Kazakh oil producers find themselves in difficult situation because of excessive oil production Bloomberg: Kazakh oil producers find themselves in difficult situation because of excessive oil production](/static/img/plug.webp)
Bloomberg News published an article titled “OPEC+ Oil-Production Cheats Show Little Sign of Making Compensation Cuts” accusing Kazakhstan of ignoring the quotas set by the international organization, reports a Kazinform News Agency correspondent.
According to the publication, to strengthen the market and balance oil prices, the OPEC+ coalition countries decided to limit oil production. However, not all countries succeeded in doing this adequately, and Kazakhstan was among them. The organization required the country to take additional measures to compensate for excess oil production and make amends for violating supply quotas.
Researchers found that OPEC+ members are not in a hurry to regulate their overproduction. For example, Kazakhstan has not even begun to reduce its developments. They explained that Kazakhstan is trying to monetize its new capacities at such a pace, such as the Tengiz field project worth $48.5 billion.
“In an effort to support global oil markets, OPEC+ urges members to make amends for unfair play with oil supplies bypassing quotas. However, there are no signs that they are repentant,” experts say.
At the coalition’s latest meeting, plans were developed to manage oil supplies until 2025, and now analysts hope that Kazakhstan will show restraint.
Oil and gas industry expert Askar Ismailov believes that blaming Kazakhstan and local officials for everything is not entirely correct. 80% of oil production belongs to international consortia or companies that the agency cannot directly influence - only negotiate with.
“In fact, OPEC+ shows that Kazakhstan promises to reduce production but cannot influence production levels because there are obligations, for example, under PSAs (Production Sharing Agreements), which cannot be violated. The consequences there are worse than breaking promises to OPEC+. Secondly, Kazakhstan’s quota share is so small that it does not affect market conditions. Compliance with quotas is more of a reputational issue, which Kazakhstan has been worsening for several years within OPEC+,” he explained.
However, Ismailov believes that Kazakhstan should not worry about this issue. OPEC+ is an informal association with an ambiguous reputation. The expert even suggests leaving this organization, which gives the country no advantages. Moreover, the quotas determined by OPEC are calculated in percentage terms.
“There is a calculated formula for quotas, but there are cases where this approach is not applied to individual countries. Political and social aspects are also taken into account. We do not influence any issues; it’s time to understand this. However, we do cover travel costs for officials, many of whom are unfamiliar with the oil production process,” the analyst stated.
As a result, Kazakh oil producers found themselves in a difficult situation. On the one hand, there are international researchers accusing them of excessive oil production - on the other, companies refusing to slow down their pace.
How the Ministry of Energy will respond to this attack is still unclear. We contacted the agency for comment but have not yet received a response.