Kazakhstan may have announced a significant update to its oil production compensation plan to OPEC on Thursday in response to its overproduction in July-a sign that on paper, at least, it is committed to the OPEC+ agreement. But Kazakstan's National Company, KazMunayGas, hasn't been given any instructions to cut its oil production in line with that new compensation plan, Interfax reported on Friday.
Kazakhstan has long touted its dedication to meeting its obligations under the OPEC+ framework, while consistently failing to reach it. And now, its obligations include not only adhering to assigned production quotas but also compensating for any excess output it has accrued in the failed pursuit of that adherence. The country had previously faced scrutiny from the OPEC Secretariat alongside Iran and Russia for exceeding their production limits during the first half of 2024. The updated compensation plan is part of Kazakhstan's strategy to align its production with agreed-upon targets and maintain its standing within the alliance.
In addition to the compensation plan, Kazakhstan's Agency for the Protection and Development of Competition has proposed adjustments to market controls and an increase in the maximum prices for petroleum products. This recommendation aims to enhance market stability and ensure fair pricing in response to the evolving production landscape.
The Energy Ministry's plan extends to reducing production levels through September 2025 to address the excess volumes produced since the start of the year.
Kazakhstan's profession of intent comes at a critical time as the global oil market faces fluctuating demand and supply challenges.
Kazakhstan's production cap is 1.468 million bpd, which it exceeded in June by about 70,000 bpd, and overshot in July as well. According to its revised compensation plan submitted to OPEC, its cumulative production would be reduced by nearly 700,000 bpd.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More