KEY POINTS
- Kazakhstan exceeded OPEC+ production quotas by 300,000 barrels daily.
- Oil minister ousted, replaced with head of new atomic agency.
- OPEC+ considers speeding up cuts for overproducing members.
Kazakhstan’s oil minister seems to have lost his position as a result of the country’s repeated violations of OPEC+ production targets. With Chevron’s assistance, the country has been producing oil at unprecedented levels, reaching 1.767 million barrels per day in February—300,000 barrels more than its allotment.
Kazakhstan surpasses OPEC+ oil quotas with record production
Kazakh oil minister was fired as a result of this overproduction, which has angered OPEC+, particularly rule-abiding members.
The presidential office said in a statement this week that Almasadam Satkaliyev, the former minister of energy, was dismissed. In an odd move given that Kazakhstan has no nuclear power plants, Satkaliyev was named head of the country’s new atomic energy organization while serving as energy minister.
The Kazakh government has been trying, but failing, to convince European and American oil giants, such as Shell, ExxonMobil, and Chevron, to reduce their output. These businesses put shareholder interests, contracts, and profits ahead of OPEC+ regulations. They operate in Kazakhstan’s Tengiz and Kashagan fields. There is scant proof that barrels are being trimmed in March, April, and May to make up for overproduction, despite assurances to the contrary.
U.S. and European oil majors defy government calls to cut
OPEC+ does not like it. Alexander Novak of Russia has stated unequivocally that members must meet their quotas, and the bloc is even thinking of accelerating the reduction in compensation for offenders.
According to Oilprice, Kazakhstan is hardly the only nation under investigation. Overproduction has also been occurring covertly in Nigeria and Iraq.
With the price of Brent crude at about $70, OPEC+ is in a precarious position. Kazakhstan has promised to reduce production, but history indicates that production will probably continue in terms of market share vs quota compliance. Now, OPEC+ has to choose between mediating the conflict or allowing it to worsen.
