Kazakhstan: Oil Sector Delays Hamper Growth Prospects

Kazakhstan, a major oil player in Central Asia, is facing production challenges due to delays in its key projects, limiting its ability to meet objectives and comply with OPEC+ quotas.

Share:

Kazakhstan, whose economy heavily relies on the oil sector, is experiencing increasing difficulties due to delays in several large-scale projects. These setbacks directly affect its production targets and jeopardize its ability to meet OPEC+ quotas. In 2024, the national oil output is expected to reach approximately 98.2 million tonnes (MMt), representing only a 4.94% increase compared to the previous year, an insufficient pace to offset the losses incurred in 2023.

The situation is further complicated by scheduled maintenance at the Tengiz and Kashagan sites, two of the country’s largest fields. These operations, necessary to stabilize production, coincide with the country’s need to adjust its production to comply with OPEC+ quotas. This combination of factors could slow national economic growth, given that oil revenues account for 50% of total exports and nearly 30% of tax revenues.

Delays at the Tengiz Field

The Tengiz field, one of the country’s main producers, is experiencing significant delays in its expansion project, known as the Future Growth Project (FGP). Initially planned for 2024, the project’s full start-up has been pushed back to 2025, mainly due to disruptions related to the COVID-19 pandemic and the technical complexity of the development. The operation’s budget, originally estimated at $36.8 billion, has been revised upward to $47 billion.

The economic impact of this delay is substantial. If the FGP had adhered to its original schedule, Tengiz’s production would have enabled a 7.7% annual increase in national output, compared to only 4.94% projected for 2024. Tengiz’s delays also limit the country’s export capacity, as this field significantly supplies the CPC pipeline, a key route for crude oil exports to the Novorossiysk terminal in Russia.

Untapped Potential at the Kashagan Field

Kashagan, another strategic field for Kazakhstan, could offset Tengiz’s production losses. Currently, this field produces around 20 MMt annually, but expansion plans are underway to increase this volume to 22 MMt by 2026. Part of this growth depends on the commissioning of new gas processing plants, built in partnership with Qatar UCC Holdings. These facilities will enable greater gas processing capacity and, consequently, an increase in oil production.

However, the success of these projects largely hinges on resolving financial disputes between the consortium partners operating the field and the Kazakh government. If negotiations fail, further delays could jeopardize long-term production forecasts.

Consequences for Exports and the Economy

The cumulative delays at Tengiz and Kashagan have a direct impact on the volumes exported through the Caspian Pipeline Consortium (CPC). In 2023, the CPC transported 56.1 MMt of crude, representing 80.1% of Kazakhstan’s total output. Without a rapid increase in production, the CPC may not reach its full capacity, thus impacting the country’s export revenues.

OPEC+ is closely monitoring Kazakhstan’s ability to meet its commitments. The country had already exceeded its quotas in the first half of 2024, necessitating a reduction in production in the following months. This further complicates operational planning and could result in additional sanctions from the organization if the country continues to exceed its thresholds.

Growth Prospects for 2025

The outlook for 2025 remains uncertain. Current forecasts depend on the completion of the Tengiz projects and the expansion of Kashagan. However, technical uncertainties and financial disputes could still push these timelines further. If Kazakhstan manages to overcome these challenges, its production could return to a stable growth level, thereby strengthening its position in the global oil market.

The expansion of the global oil and gas fishing market is accelerating on the back of offshore projects, with annual growth estimated at 5.7% according to The Insight Partners.
The Competition Bureau has required Schlumberger to divest major assets to finalise the acquisition of ChampionX, thereby reducing the risks of market concentration in Canada’s oilfield services sector. —
Saturn Oil & Gas Inc. confirms the acquisition of 1,608,182 common shares for a total amount of USD3.46mn, as part of its public buyback offer in Canada, resulting in a reduction of its free float.
OPEC slightly adjusts its production forecasts for 2025-2026 while projecting stable global demand growth, leaving OPEC+ significant room to increase supply without destabilizing global oil markets.
Talks between European Union member states stall on the adoption of the eighteenth sanctions package targeting Russian oil, due to ongoing disagreements over the proposed price ceiling.
Three new oil fields in Iraqi Kurdistan have been targeted by explosive drones, bringing the number of affected sites in this strategic region to five in one week, according to local authorities.
An explosion at 07:00 at an HKN Energy facility forced ShaMaran Petroleum to shut the Sarsang field while an inquiry determines damage and the impact on regional exports.
The Canadian producer issues USD 237 mn in senior notes at 6.875 % to repay bank debt, repurchase USD 73 mn of 2027 notes and push most of its maturity schedule to 2030.
BP revised upwards its production forecast for the second quarter of 2025, citing stronger-than-expected results from its US shale unit. However, lower oil prices and refinery maintenance shutdowns weighed on overall results.
Belgrade is engaged in complex negotiations with Washington to obtain a fifth extension of sanctions relief for the Serbian oil company NIS, which is majority-owned by Russian groups.
European Union ambassadors are close to reaching an agreement on a new sanctions package aimed at reducing the Russian oil price cap, with measures impacting several energy and financial sectors.
Backbone Infrastructure Nigeria Limited is investing $15bn to develop a 500,000-barrel-per-day oil refinery in Ondo State, a major project aimed at boosting Nigeria’s refining capacity.
The Central Energy Fund’s takeover of the Sapref refinery introduces major financial risks for South Africa, with the facility still offline and no clear restart strategy released so far.
PetroTal Corp. records production growth in the second quarter of 2025, improves its cash position and continues replacing key equipment at its main oil sites in Peru.
An explosion caused by a homemade explosive device in northeastern Colombia has forced Cenit, a subsidiary of Ecopetrol, to temporarily suspend operations on the strategic Caño Limón-Coveñas pipeline, crucial to the country's oil supply.
U.S. legislation eases access to federal lands for oil production, but fluctuations in crude prices may limit concrete impacts on investment and medium-term production, according to industry experts.
Permex Petroleum Corporation has completed a US$2mn fundraising by issuing convertible debentures, aimed at strengthening its cash position, without using intermediaries, and targeting a single institutional investor.
Petróleos de Venezuela S.A. (PDVSA) recorded $17.52bn in export sales in 2024, benefiting from increased volumes due to U.S. licences granted to foreign partners, according to an internal document seen by Reuters.
The detection of zinc in Mars crude extracted off the coast of Louisiana forced the US government to draw on its strategic reserves to support Gulf Coast refineries.
Commissioning of a 1.2-million-ton hydrocracking unit at the TANECO site confirms the industrial expansion of the complex and its ability to diversify refined fuel production.