Pictured: Chevron’s Tengiz oil field development in Kazakhstan. Image courtesy of Chevron.
(Bloomberg) – Kazakhstan is considering its options for complying with the country’s OPEC+ obligations to cut production, after Saudi Arabia doubled down on its efforts to bring quota-cheats in line over the weekend.
“Kazakhstan always was and is committed to OPEC+ agreement,” the Astana-based ministry said on Tuesday in emailed reply to questions. Central Asia’s largest oil producer “is considering all possible options for meeting its commitments.”
See also: OPEC+ oil production surges as Kazakhstan ignores, exceeds quota
Oil has declined and banks including Goldman Sachs Group Inc have cut their price forecasts since OPEC+ decided on May 3 to make another super-sized production increase. Cartel leader Saudi Arabia warned at the meeting that the group’s overproducing members should fall in line, or face further output hikes.
Kazakhstan, the largest over-producer in recent months, may be forced to make additional withdrawals from its oil fund by the fall to cover planned government spending amid lower prices, Halyk Finance said in a research note. The national oil fund’s revenue fell by 43% by the end of April from year earlier, as lower prices offset the increase in crude output, Halyk Finance said.
Russia, a fellow member of OPEC+, is considering changing its budget building mechanism in response to sliding oil revenue.
Kazakhstan agreed at the May 3 meeting of the Organization of the Petroleum Exporting Countries and its allies to produce 1.5 million bpd in June, compared with 1.85 million bpd in March. The Energy Ministry did not specify how it would achieve that level of production, and noted that the $48.5 billion expansion of the Chevron-led Tengiz oil field is due to become fully operational this quarter.
