Kazakhstan is set to be key driver of oil production

In 2023, Kazakhstan will produce 160,000 more barrels of oil and gas condensate per day than it did last year, according to the Organization of the Petroleum Exporting Countries (OPEC).

Expansion projects by Kashagan, Tengiz and Karachaganak are expected to be behind this increase in Kazakhstan’s output. In December 2022, the country already increased its production by 7,000 barrels to 1.6 million barrels a day thanks to Kashagan and Karachaganak.

OPEC believes that non-member countries will decrease their oil and gas condensate production by 150,000 barrels a day to 67.01 million barrels a day this year. However, countries such as Kazakhstan, the U.S., Norway, Brazil, Canada and Guyana are expected to increase their oil output. The U.S. alone is going to increase oil production by 1.11 million barrels to 20.14 million barrels a day, the biggest in the industry.

Russia has already cut its oil output by 900,000 barrels to 10.13 million barrels a day. Mexico is also going to decrease oil production.

The oil export from Kazakhstan to Europe via the Caspian Pipeline Consortium (CPC) grew in December 2022 by 5% to 1.5 million barrels a day over November 2022 (or by 8% compared to December 2021). Oil export through the Baku-Tbilisi-Ceyhan pipeline rose by 10% to 633,000 barrels a day in December.

OPEC also reported a slight decline in Urals price to $52.21 per barrel in January 2023 compared to $52.23 per barrel in December 2022.  All other crudes monitored by the organization were on a ride last month. OPEC reference basket of crudes reported was estimated at $81.23 in January compared to $79.68 in December, WTI at $78.19 per barrel in January and $76.50 in December, and Brent at $83.91 and $81.34, respectively.

This means that the spread between Brent and WTI increased from $4.82 per barrel in December 2022 to $5.75 in January 2023 on average. CPC Blend, which is supplied via the CPC, went up in price by $3.87 per barrel and is traded at $3.75, a discount to North Sea Dated that cost $82.86 per barrel as of January 23.