Kazakhstan Hits Record Oil Production Amid Russian Export Challenges
Kazakhstan’s oil production has reached a new peak, with daily output surpassing 2.12 mln barrels per day as of February 19. Despite facing significant challenges due to disruptions in its primary export route, the Caspian Pipeline Consortium (CPC), the country has managed to maintain and even increase production levels. This growth in output is attributed to enhanced production at key oilfields, notably the Tengiz oilfield, operated by Tengizchevroil, a joint venture led by Chevron Corp.
Kazakhstan relies heavily on the CPC, which accounts for over 80% of its oil exports. However, Russia recently reported a 30-40% reduction in the CPC’s capacity after a Ukrainian drone attack. This has raised questions about how Kazakhstan has continued to increase oil output despite these export limitations. The country has been able to offset these constraints by ramping up production at the Tengiz oilfield, which is undergoing a major $48 bn expansion project.
In response to the challenges of relying on CPC, Kazakhstan has been exploring alternative export routes. One notable option is the Baku-Tbilisi-Ceyhan (BTC) pipeline, which connects Kazakhstan to Turkey’s port of Ceyhan. According to Kazakhstan’s Energy Minister, Almasadam Satkaliyev, oil exports through the BTC pipeline could increase from the current 1.5 mln metric tons per year to 20 mln metric tons annually. This increase would significantly reduce Kazakhstan’s dependence on Russian export routes and bolster its position in the global oil market.
Despite the current surge in output, Kazakhstan may need to adjust production levels in the near future. The country, alongside Russia and Iraq, submitted compensation plans to the Organization of the Petroleum Exporting Countries (OPEC) in response to overproduction in the first half of 2024. Kazakhstan’s compensation commitment involves reducing production by 620,000 barrels per day over the next 15 months, through September 2025. This adjustment could help balance the global oil market as OPEC+ prepares to scale back production cuts in April 2025.
