Cost of production at ‘mature’ oil fields in Kazakhstan can reach up to $50

The outlook for the oil market has gained a clearer direction in the context of the OPEC+ decision, reports a Kazinform News Agency correspondent.

Kashagan
Photo credit: KMG

This marks the first signal from oil-exporting countries in response to U.S. President Donald Trump’s proposals to lower oil prices.

On the eve of the OPEC+ statement, oil and gas industry expert Askar Ismailov, in an interview with Kazinform, predicted that Saudi Arabia would not agree to proposals for reducing oil prices. He explained that Riyadh plans to invest approximately $600 billion into the U.S. economy, which would mean cutting its budget twice—not only to find funds for investments but also due to lower oil revenues.

“For oil prices to drop significantly, as Trump suggested—to $40 per barrel—the world’s oil production would have to double. This is currently impossible,” emphasized Askar Ismailov.

At the same time, he pointed out that the U.S. itself is at its peak oil production level, making it quite difficult to further increase output.

“Considering that all oil fields in the U.S. are ‘mature’ achieving a production boost would require significant investments. Exxon Mobil’s leadership has previously expressed skepticism about this due to the industry's specific nature. ConocoPhillips has announced that it is ready to invest about $8 billion, but this would take 5-6 years. It is uncertain whether Trump will still be in office by then. That’s why I believe these factors must be considered, and a sharp drop in oil prices is unlikely,” the expert noted.

Another important aspect to consider in this context is the shale revolution, which once spurred the growth of U.S. oil production but is now unlikely to be repeated.

“If we talk about increasing shale oil production in the U.S., its initial cost was around $50-60 per barrel, while conventional oil averaged about $10. Now that capital expenditures have been recovered, shale oil costs around $30-40 per barrel. But this is still very critical for the U.S. If they want to increase production, shale oil will take a heavy hit,” Askar Ismailov believes.

“If OPEC+ returns to maximum production levels, oil prices could drop to $60 per barrel. But this price is generally acceptable for Kazakhstan,” the expert stated.

According to him, the cost of oil production at Kazakhstani fields varies. Major fields such as Tengiz, Kashagan, and Karachaganak still have sufficient reservoir pressure, allowing for production costs between $5 and $10 per barrel. However, at mature fields operated by KazMunayGas and Chinese oil companies, costs are higher—potentially reaching $40-50 per barrel.

“This is the nature of the industry. You have to invest more to extract the oil, including additional injection wells to maintain reservoir pressure. All of this requires significant expenses,” Askar Ismailov explained.

Earlier, it was reported that Kazakhstan reaffirmed its commitment to the OPEC+ Agreement following the 58th meeting of the OPEC+ Joint Ministerial Monitoring Committee, which was held via videoconference on February 3.

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