Kazakhstan has once again found itself on the wrong side of OPEC+ production targets, and this time, it seems to have cost the oil minister his job. The country has been pumping oil as if the quotas didn’t exist, hitting record production levels at 1.767 million barrels per day in February (with the help of Chevron)—a cool 300,000 barrels over its quota.
Naturally, this hasn’t sat well with OPEC+, particularly those members actually following the rules, and it has cost the country’s oil minister his job.
Enter Almasadam Satkaliyev, as of this week, is out as energy minister according to a statement made by the presidential office. While he may be out as energy minister, he is in as the head of Kazakhstan’s newly minted atomic energy agency.
The timing is interesting given Kazakhstan has zero nuclear power plants.
The Kazakh government has been scrambling—unsuccesfully—to get U.S. and European oil majors operating in the country to turn down the taps.
Chevron, ExxonMobil, Shell, and the other big players running Kazakhstan’s Tengiz and Kashagan fields don’t exactly take orders from the government. They take their cues from shareholders, contracts, profits, and—apparently—not OPEC+. And while Kazakhstan has promised to compensate for past overproduction by cutting barrels in March, April, and May, there’s little evidence that’s actually happening.
OPEC+ isn’t amused. Russia’s Alexander Novak has already made it clear that members need to stick to their quotas, and the bloc is even talking about speeding up compensation cuts for offenders.
Kazakhstan isn’t alone in this. Iraq, Nigeria, have been quietly overproducing as well.
With Brent crude hovering near $70, OPEC+ is already on shaky ground. Kazakhstan might promise more cuts, but if history tells us anything, it’s that when the decision comes down to market share or quota discipline, the barrels keep flowing.
OPEC+ is left deciding whether to play referee or just let the whole thing implode.
Source: By Julianne Geiger from Oilprice.com