KazMunayGas was not required to cut production under the new OPEC+ plan

Kazakhstan may have announced a significant update to its oil production compensation plan to OPEC on Thursday in response to its July glut — a sign that, on paper at least, it is committed to the OPEC+ deal. But Kazakhstan’s National Company, KazMunayGas, has received no instructions to cut its oil production under the new compensation plan, Interfax reported on Friday.

Kazakhstan has long expressed its commitment to meeting its OPEC+ obligations, but has consistently failed to meet them. And now, its obligations include not only adherence to assigned production quotas, but also compensation for any production surplus accumulated in the failed pursuit of this adherence. The country had previously faced scrutiny from the OPEC Secretariat alongside Iran and Russia for exceeding production limits in the first half of 2024. The updated compensation plan is part of Kazakhstan’s strategy to align its output with agreed targets and to- and maintain the position within the alliance.

In addition to the compensation plan, Kazakhstan’s Agency for the Protection and Development of Competition proposed adjustments to market controls and an increase in maximum prices for petroleum products. This recommendation seeks to improve market stability and ensure fair pricing in response to the evolving production landscape.

The Energy Ministry’s plan extends to reducing production levels until September 2025 to address the surplus of volumes produced since the start of the year.

Kazakhstan’s bid comes at a critical time as the global oil market faces fluctuating supply and demand challenges.

Kazakhstan’s production ceiling is 1.468 million bpd, which it exceeded in June by about 70,000 bpd and exceeded again in July. Under its revised compensation plan submitted to OPEC, its cumulative output would be cut by nearly 700,000 bpd.

By Julianne Geiger for Oilprice.com

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