Should Kazakhstan ditch the OPEC+ deal
In November 2024, Bloomberg columnist Javier Blas referred to Kazakhstan as an «internal foe» of OPEC+ for consistently exceeding its oil production quotas throughout 2024. The nation’s budget heavily relies on oil revenues, leading many experts to argue that adhering to the OPEC+ agreement is financially disadvantageous for Kazakhstan.
Struggles with OPEC+ compliance
In November 2024, Kazakhstan increased its daily oil production (excluding gas condensate) by 16% compared to October, the only month in 2024 when the country significantly reduced its output. By Nov. 24, oil production had reached 1.498 million barrels per day (mmbpd), exceeding its OPEC+ quota of 1.468 mmbpd by 30,000 barrels.
In early December 2024, Kazakhstan, along with seven other OPEC+ member nations, agreed to extend the production cuts of 2.2 mmbpd. As part of the agreement, Kazakhstan committed to capping its daily output at 1.468 mmbpd until the spring of 2025.
The OPEC+ agreement, now extended through March 2025, allows Kazakhstan to slightly increase its quota to 1.473 mmbpd starting in April, with further growth permitted by September 2026, up to 1.550 mmbpd. However, the anticipated completion of the Tengiz oil field expansion project in the summer of 2025 is expected to add up to 260,000 barrels per day (bpd) to Kazakhstan’s production, a volume far exceeding the OPEC+ quotas.
Why Kazakhstan stays in OPEC+
Askar Ismailov, CEO of PACE Analytics, argues that Kazakhstan’s membership in OPEC+ carries significant reputational value.
«Kazakhstan ranks 17th in global oil production and it’s not a major player in terms of global output. News from the Middle East has a much greater impact on oil prices than Kazakhstan exceeding its quotas,» Ismailov explained. «For Russia, Kazakhstan’s membership in OPEC+ is also about reputation. It aligns Kazakhstan with Russia and other oil-producing nations often seen as being at odds with the U.S., which takes a critical stance toward OPEC+.»
Oil and gas analyst Oleg Chervinsky shares a similar perspective.
«I don’t think Kazakhstan needs OPEC+, and OPEC+ doesn’t need Kazakhstan either,» Chervinsky said. «Kazakhstan’s annual production accounts for less than 2% of global output. It’s naive to believe that we can influence global oil prices — whether to raise or lower them — with such relatively small production volumes.»
Both experts, however, agree that leaving OPEC+ would create significant diplomatic challenges for Kazakhstan, particularly in its relationships with Russia and Saudi Arabia.
«When the question arises about whether Kazakhstan would reduce production if it were not part of OPEC+, the answer is clear: Kazakhstan is not reducing production even as a member,» Ismailov said. «There are no penalties for exceeding quotas, but the agreement is essentially a gentleman’s arrangement. If it’s not respected, Saudi Arabia could significantly ramp up its production, sharply driving down oil prices. That would impact everyone: Russia, Kazakhstan, Iran and other countries heavily reliant on oil revenues. Therefore, it’s crucial to avoid pushing Saudi Arabia to a breaking point.»
Kazakhstan’s Ministry of Energy has responded to Kursiv.media’s inquiry on the matter by emphasizing that membership in OPEC+ is a strategic decision, and the country’s production obligations could be subject to change.
«We highly value our cooperation with OPEC and our OPEC+ partners to promote stability in the global oil market and maintain a balance of interests among exporters, consumers and investors. The objectives of OPEC+ align with Kazakhstan’s national interests. Kazakhstan is taking measures to fulfill its obligations, with any overproduced volumes being compensated according to the compensation plan submitted to the OPEC Secretariat. However, these obligations may be adjusted based on market conditions,» the ministry stated.
Is Kazakhstan ready to break free from OPEC+?
Chervinsky believes that Kazakhstan might withdraw from the deal.
«Next year, production at the Tengiz oil field is expected to increase significantly, by around 250,000 bpd. It is unclear how Kazakhstan will navigate this situation, given that the agreement to reduce oil production has been extended until April. Kazakhstan might potentially withdraw from the deal,» Chervinsky said.
He explained that the Ministry of Energy has limited influence over major oil projects like Tengiz, Kashagan and Karachaganak, as production there is typically only constrained by maintenance work or unexpected outages. The ministry has no real leverage to force these fields to curb production. However, slight reductions in output could be achieved by regulating export quotas for small and medium-sized oil-producing companies.
Chervinsky noted that Kazakhstan has been regulating production by increasing quotas for domestic supply from independent oil companies while reducing export quotas.
«This is how Kazakhstan manages its production levels. However, it’s not profitable due to the significant price difference between domestic and global markets. Kazakhstan is far more interested in exporting oil, especially given the current budget deficit. The country faces the challenge of balancing its need to replenish the budget with its obligations under the OPEC+ quotas,» Chervinsky concluded.
Ismailov, however, expressed doubts about Kazakhstan’s commitment to reducing oil production.
«I don’t think Kazakhstan will take any meaningful action. While KazMunayGas (KMG) is a public company, it is subordinate to the Samruk-Kazyna fund, which reports directly to the president, not to the Ministry of Energy. The Ministry of Energy can promise whatever it wants, but Samruk-Kazyna will ultimately do what is most profitable,» Ismailov remarked.
