Kazakhstan has updated its compensation plan for overproduced oil volumes for the first seven months of 2024 as part of its commitments under the OPEC+ agreement, according to a press release from the OPEC Secretariat. The revised plan indicates that cumulative production will be reduced by 699,000 barrels per day (b/d), an increase from the previously announced 620,000 b/d. Iraq has also submitted an updated plan.
Over the next 14 months, extending through September 2025, Kazakhstan will compensate for 12.7% more oil than initially stated in July. Iraq, meanwhile, has committed to compensating 1.44 million b/d, up from the previous 1.184 million.
«Kazakhstan updated the Compensation plan including overproduction in July and sent it to the OPEC Secretariat. Kazakhstan will make every effort to comply with its obligations and compensate for overproduction according to the Compensation plan,» stated the Ministry of Energy of Kazakhstan.
The rate of production cuts will remain the same for the rest of this year, but it is expected to increase in 2025. For instance, production in January is scheduled to be reduced by 65,000 b/d, up from the earlier target of 45,000 b/d. In February, the reduction will be 52,000 b/d, compared to the previously announced 32,000 b/d.
In July 2024, OPEC+ members began offsetting excess oil output during the first six months of the year. Kazakhstan’s compensation amount was set at 18,000 b/d. The most significant reduction is scheduled for October this year, at 265,000 b/d, while the smallest cut will occur in September 2025, at just 1,000 b/d.
Iraq plans to cut production more gradually than Kazakhstan, with the highest reductions, ranging from 100,000 to 120,000 b/d, scheduled between November 2024 and May 2025.
Additionally, Russia has pledged to reduce output by 480,000 b/d. Moscow has not announced any changes to its plans. Russia will begin reducing production in October, starting with a 10,000 b/d cut, followed by a reduction of 30,000 b/d in November. No further reductions are anticipated between December and March. However, from March through September 2025, Russia will gradually increase its reduction, starting with 16,000 b/d in March and reaching 110,000 b/d by September.
Kazakhstan began producing more oil than it had pledged under the OPEC+ agreement in early 2024. The Ministry of Energy initially promised to compensate for the overproduction by May. In March, Kazakhstan announced it would extend an additional voluntary reduction of 82,000 b/d for the second quarter.
In May 2024, Kazakhstan reduced its oil production but exceeded the amount pledged to its OPEC+ partners. Later, the Ministry of Energy assured that Kazakhstan would fully meet its commitments by June. In early July, the ministry clarified that Kazakhstan would gradually compensate for the overproduction during the first six months of the year, with plans to complete the compensation by September 2025.
The current OPEC+ arrangement will remain in effect until the end of 2025. Meanwhile, eight OPEC+ countries, including Kazakhstan, have voluntarily committed to additional production cuts. These commitments, first announced last April, have since been extended.
Under these commitments, the countries agreed to reduce production by 1.65 million b/d by the end of 2025 and by 2.2 million b/d by September 2024. However, the situation has been complicated by recent indications from some of these countries, including Kazakhstan, that they want to increase their production. For instance, last December, Kazakhstan produced 1.56 million b/d, exceeding its quota of 1.55 million b/d.
