Kazakhstan reduced crude-oil production in June beyond the level required by the recent OPEC+ agreement, the country’s energy ministry said on Friday.
‘‘Last month, oil production in Kazakhstan amounted to 5.3 million tons, or 1.297 million barrels per day, excluding gas condensate, according to preliminary figures,’’ the ministry’s press service told Interfax Kazakhstan.
The country over complied with its agreed cut in June fulfilling its obligations to reduce oil production by 105%, the ministry added. In May, Kazakhstan has produced 6.1 million tons of crude oil.
Since Central Asia’s wealthiest country failed to meet its obligations in May, it is expected to compensate for its poor compliance with OPEC+ cuts by making larger cuts in production in August and September.
Kazakhstan is now planning to produce 85.2 million tons of oil in 2020, according to the energy ministry. Previously, the country announced it would produce 86 million tons of crude by the end of the year. Then, the production cuts would be slightly eased, as Kazakhstan is planning to produce 86 million tons in 2021, and 89.6 million tons in 2022.
The country has produced 90.5 million tons of crude oil in 2019.
As of today, Kazakhstan is ranked the world’s ninth-largest crude oil exporter and holds three percent of the world’s total oil reserves, placing it in the number 11 globally and making it the third-largest oil producer in the Caspian region, after Russia and Iran. Sixty-two percent of Kazakhstan’s landmass sits on areas containing oil and natural gas, and there are 172 oilfields throughout the country, of which more than 80 are under development. More than 90 percent of Kazakhstan’s oil is concentrated in its 15 largest fields, which include Kashagan, Tengiz, and Karachaganak.
Earlier this year, the government of Kazakhstan announced it would support OPEC+’s decision — a historic agreement reached between the Organization of the Petroleum Exporting Countries (OPEC) and other major energy powers, known as OPEC+, following the brutal price war between Russia and Saudi Arabia.
Back then, the parties agreed to reduce oil production by 9.7 million barrels per day in May-June, and then ease these to 7.7 million bpd, to stay in effect until the end of the year. Then, from January 2021, the production cuts would be further eased to 5.8 million bpd, to remain in effect until end-April 2022.
In accordance with its commitments, Kazakhstan should have reduced its output starting May 1, 2020. The reduction was agreed to be 390,000 barrels per day for the first two months, May and June, while the burden was expected to be shared by “medium, large and gigantic fields,” with smaller fields exempted. With a decrease by 390,000 barrels per day, the daily oil production in Kazakhstan should stand at 1.339 million barrels per day.
With an aim to comply with the oil cuts, the government of Kazakhstan has adopted a decree on June 23, to temporary restrict the use of “medium, large and gigantic fields proportionally to the country’s export volumes.’’
Officials in Nur-Sultan believe the move will help meet the country’s needs and reduce oil production.
Meanwhile, the OPEC cut production to 22.69 million barrels a day last month, the lowest since May 1991, according to a survey by Bloomberg.
The Organization of the Petroleum Exporting Countries (OPEC) and other major energy powers created the OPEC+ alliance in 2016, forming a group that controls more than half of the world's oil production.