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Oil Price

Kazakhstan Sees No Major Risks From UAE Exit From OPEC+

Kazakhstan does not expect major economic turbulence following the United Arab Emirates’ withdrawal from OPEC and the OPEC+ agreement, despite the country’s continued dependence on global oil prices, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin said. The UAE announced that it would leave OPEC on May 1, citing disagreements over existing production quotas. Abu Dhabi plans to increase oil output amid concerns over possible supply disruptions through the Strait of Hormuz and the risk of shortages on the global market. The departure of one of the world’s largest oil producers has fueled concerns about a potential drop in crude prices and the possibility of a price war among exporters. However, Zhumangarin said international analysts remain cautious in assessing the broader implications of the move. “Some are saying this marks the end of the OPEC era. In reality, international expert assessments and forecasts remain very cautious regarding whether this could lead to a price war and whether such a scenario is even possible,” he told reporters. According to the minister, even if the UAE raises production from the current 3.5 million barrels per day to 5 million barrels per day, the global market would continue to balance itself through other major producers and alternative suppliers. Commenting on the possible impact of lower oil prices on Kazakhstan’s economy, Zhumangarin noted that the government traditionally prepares several macroeconomic development scenarios. “This year, the pessimistic forecast was based on an oil price of $50 per barrel,” he said. The minister also pointed out that oil prices had exceeded $100 per barrel several times this year amid tensions in the Middle East. According to Zhumangarin, Astana retains the ability to adjust budget spending if conditions on the oil market deteriorate. On the eve of the US-Israeli war on Iran in late February, the industry benchmark Brent crude was trading at approximately $70 to $73 per barrel; as of May 11, it had risen to slightly below $104 per barrel. In April, OPEC+ countries increased oil production by 206,000 barrels per day, including a rise in Kazakhstan’s quota from 1.569 million to 1.599 million barrels per day by June. Kazakhstan’s authorities would like to see further growth in national oil production, however, a lack of viable export routes aside from Russia, as well as the fallout from Ukrainian attacks on the Russian port of Novorossiysk in November last year, have limited Kazakhstan's ability to fully exploit the recent rise in prices.

OPEC

Kazakhstan Reaffirms OPEC+ Commitment While Seeking to Renegotiate Investor Contracts

Kazakhstan has confirmed it will remain a part of the OPEC+ agreement on oil production cuts, despite persistently exceeding its allocated quotas. Prime Minister Olzhas Bektenov made the announcement at a press conference on Tuesday, while also revealing that the government is initiating negotiations to revise production sharing agreements (PSAs) with foreign investors operating in the country’s largest oil and gas fields. The OPEC+ agreement, an alliance between OPEC members and non-OPEC oil-producing countries, including Kazakhstan, aims to coordinate output to stabilize global energy markets. Under the current deal, signed in December 2023, member states voluntarily committed to cutting combined oil production by 2.17 million barrels per day through the end of 2026. However, Kazakhstan has consistently exceeded its quota in recent months. According to the Ministry of Energy, oil exports in June 2025 reached 1.86 million barrels per day, 80,000 more than in May and nearly 500,000 barrels above the country’s voluntary limit. The surge is primarily attributed to the expansion of the Tengiz oil field, one of Kazakhstan’s largest energy projects. The $49 billion Future Growth Project is already operational and is expected to boost annual output by 12 million tons, or roughly 260,000 barrels per day, an increase of nearly 40%. Acknowledging the challenges of meeting OPEC+ targets, Bektenov emphasized Kazakhstan’s continued commitment to the deal: “We are not considering withdrawing from the OPEC+ agreement, as we believe it is useful and contributes to stability in the oil market,” Bektenov stated. “We will strive to fulfill our obligations, but with national interests in mind.” At the same time, Bektenov underscored the government’s limited control over production levels at key fields such as Tengiz, Karachaganak, and Kashagan, where foreign investors hold substantial stakes. “We cannot demand that our partners reduce production, as they have made significant investments and are counting on a return,” he said. To address this issue, Kazakhstan has begun discussions with investors to revise existing PSAs, aiming to secure a greater share of national revenues from energy production. “There is a view that the country’s interests are not fully reflected in the existing agreements. We are starting a dialogue on new agreements for a new period,” Bektenov said. “At the same time, we will act carefully to maintain the investment climate.” This dual strategy, upholding international commitments while seeking more favorable terms, illustrates Kazakhstan’s intent to balance global cooperation with national economic priorities. PSAs for the country’s three main oil fields are due to expire in the coming decades: Tengiz in 2033, Karachaganak in 2037, and Kashagan in 2041. Together, these fields account for approximately two-thirds of Kazakhstan’s total oil output, 67 million out of 90 million tons annually. As previously reported by The Times of Central Asia, President Kassym-Jomart Tokayev instructed the government in January to begin seeking revisions to the PSA terms well ahead of their expiration.

Oil Market

Slippery Slope: How Volatile Oil Prices Threaten Kazakhstan’s Energy Giant

With global oil markets in flux and prices dipping below $70 per barrel, Kazakhstan’s state oil company faces mounting financial strain. If KazMunayGas (KMG) fails to adapt, it risks edging toward a fiscal cliff. Yet, political constraints, exacerbated by the ongoing specter of potential social unrest, have hindered the company’s ability to implement reforms. OPEC+ Fuels Market Uncertainty The global oil market is entering a new period of turbulence reminiscent of the pandemic era. Despite prolonged efforts by OPEC+ to manage output and stabilize prices, the alliance’s fragile consensus unraveled this April, when Saudi Arabia and Russia led an unexpected increase in production, undermining earlier commitments and tipping the market into oversupply. Meanwhile, U.S. shale producers have continued to expand their output and export aggressively, squeezing traditional suppliers out of lucrative Asian markets. A decelerating Chinese economy, the world’s largest oil importer, adds further downward pressure. As a result, Brent crude fell below $70 per barrel in early May and briefly traded under $65. For Kazakhstan, where oil exports are a key source of budgetary and foreign exchange income, this trend spells trouble, and KMG is particularly exposed. The “Black Hole” in KMG’s Finances Public data shows that KMG’s production costs vary from $40 to $70 per barrel, depending on the field. However, factoring in transportation, taxes, and social obligations, the real breakeven point nears $90 per barrel. Aging infrastructure in the Mangistau region, reliant on constant technical upkeep and subsidies, only adds to the burden. KMG’s debt load compounds the challenge. At the end of 2024, its total debt exceeded 4 trillion tenge ($7.87 billion). With export revenues dwindling, debt servicing is becoming untenable. Even short-term dips to $60-65 per barrel could have systemic consequences, stalling new investments, triggering layoffs, and slashing social spending. A key drain is OzenMunayGas (OMG), KMG’s subsidiary in Zhanaozen, where production costs reportedly hit $90 per barrel. “OzenMunayGas exemplifies how populism, inflated promises, and stagnant reforms can turn a major asset into a financial sinkhole,” Arman Bataev, a former internal auditor at KMG has stated. On his Telegram channel, Finmentor.kz, Bataev warned that a $90 production cost versus Brent at $59 is “not a temporary hardship but a dead end.” OMG required 30 billion KZT in financial aid last year, and Bataev predicts it may require 60-70 billion KZT in 2025. KMG Downplays Risks KazMunayGas officials maintain that the company is “prepared for all scenarios” and holds “sufficient reserves.” At a May press briefing, Deputy Chairman Aset Magauov emphasized that 70% of KMG’s output is sold domestically, insulating it somewhat from global price volatility. “Analysts expect prices to average $65 per barrel this year, but forecasts are inherently uncertain,” Magauov said. “We have contingency plans and cost-optimization measures ready. We are equipped to handle price fluctuations.” Magauov also noted that domestic oil prices are lower than export prices, and products like gasoline and diesel, refined at KMG’s three facilities, are now sold at market rates following the end of state price controls. He added...

Oil Price

KazMunayGas Sees No Risk from Falling Oil Prices, Prepares for Market Fluctuations

Kazakhstan’s national oil company KazMunayGas (KMG) has developed contingency strategies to manage volatility in global hydrocarbon markets and says it is fully prepared for any changes in oil prices. As of the morning of May 5, Brent crude had dropped to $59.30 per barrel and WTI to $56.19, the lowest levels since April 9, following the OPEC+ decision to increase production. In response to questions at a media briefing, KMG Deputy Chairman Aset Magauov said the company foresees no significant risks despite this sharp decline. “Analysts expect oil prices to average around $65 per barrel this year, though no one can predict with certainty,” Magauov stated. “We don’t see any risks for KazMunayGas. We have prepared for various scenarios and identified measures to optimize our expenses. In principle, we are ready for any fluctuations.” KMG, which accounts for 26% of Kazakhstan’s total oil production and 80% of the domestic refining market, supplies roughly 70% of its crude oil to the domestic market. This oil is processed at Kazakhstan’s major refineries to ensure stable fuel and lubricant supplies. According to Magauov, the cost of domestic supply remains well below export prices, insulating KMG from international volatility. “Even while export prices fluctuate, domestic prices remain stable and significantly lower than the lowest export benchmarks,” Magauov said. “Therefore, the majority of our sales, around 70%, are unaffected by global market movements. Moreover, exports of gasoline and diesel are limited, with nearly all production sold domestically.” Magauov also noted ongoing discussions with Russian energy firm Tatneft on the potential joint development of the Atyrau refinery. As previously reported by The Times of Central Asia, Kazakhstan’s antitrust agency proposed privatizing state-owned stakes in the Pavlodar and Atyrau oil refineries, moves that could reshape the sector’s competitive landscape. Meanwhile, Energy Minister Yerlan Akkenzhenov announced in April that Kazakhstan aims to double its domestic oil refining capacity by 2040, from 17.9 million tons in 2024 to 38 million tons annually.

Oil Production

Kazakhstan Braces for Economic Fallout from OPEC+ Output Hike

The latest OPEC+ decision to boost oil production in a strained global market threatens to push Kazakhstan closer to recession and further inflation. On May 3, OPEC+ members agreed to a significant increase in oil output for June. Leading financial outlets, including Bloomberg, suggest that the move is intended to penalize member states that have consistently breached their production quotas, most notably Kazakhstan and Iraq. The announcement triggered a sharp drop in oil prices. Production will rise by 411,000 barrels per day in June, following a tripling of output in May from the originally planned volume. Analysts attribute the shift to Riyadh’s growing frustration with non-compliant members. According to Rystad Energy analyst Jorge Leon, a former OPEC official, Saudi Arabia aims to “financially wear down” these states while aligning with U.S. President Donald Trump’s push for lower energy prices. Kazakhstan’s Overproduction at Tengiz Despite repeated assurances from Kazakhstan’s Ministry of Energy that they would honor OPEC+ agreements, the country exceeded its January quota by 32,000 barrels per day (bpd), producing 1.5 million bpd versus an allotted 1.468 million. This surge followed Tengizchevroil LLP’s launch of a new expansion phase at the Tengiz oil field in the Atyrau region, elevating output there to 870,000 barrels per day, 45% above the 2024 average. The expansion is expected to add 12 million tons annually to Tengiz’s crude production. Tengizchevroil is a joint venture comprising Chevron (50%), ExxonMobil (25%), KazMunayGas (20%), and LUKOIL (5%). Falling Prices and Criticism of OPEC’s Tactics Following the OPEC+ announcement, Brent crude futures fell to $59.30 per barrel on May 5, with U.S. WTI at $56.19. Some analysts argue Kazakhstan is being unfairly targeted. As Reuters reports, Kazakhstan contributes only 5% of OPEC+ production and under 2% of global output. Analysts at the Stankevicius Group note that larger producers such as the UAE, Russia, and Iraq have repeatedly breached quotas without facing similar scrutiny. They argue that Saudi Arabia’s surge in production undermines the cartel’s objectives more than Kazakhstan’s actions. “Saudi Arabia, which has sharply increased its oil production, is causing even greater damage to the OPEC+ agreement by encouraging lower prices," the analysts claimed. "In other words, Kazakhstan is maintaining a balance of interests and the interests of other cartel members. Meanwhile, other members are allowing themselves to disrupt the market balance.” Planning for a Downturn Oil revenues are central to Kazakhstan’s state budget, prompting government officials to prepare for a potential downturn. Deputy Prime Minister and Minister of National Economy Serik Zhumangarin stated in April that contingency plans are being developed for scenarios where oil prices fall to $55 or even $50 per barrel. However, the national budget is pegged to a $75 per barrel benchmark. According to analyst Murat Kastaev, social obligations make spending cuts politically infeasible, leaving the government reliant on increased transfers from the National Fund and a probable weakening of the tenge. While GDP growth could slow to 3-3.5% at current prices, a sustained drop to $40-50 per barrel may trigger a recession...

Oil Market

Kazakhstan Weighs OPEC+ Exit, Raising Fears of Global Oil Price War

Kazakhstan is reportedly considering a reassessment of its participation in the OPEC+ alliance, raising concerns among major global oil market players, according to Reuters. Reuters columnist Ron Bousso Thomson noted that recent statements from Kazakhstan’s new Minister of Energy, Yerlan Akkenzhenov, emphasized prioritizing national interests over adhering to the cartel's production quotas. In an interview with Reuters, Akkenzhenov said, "Kazakhstan will proceed from its own interests in determining production volumes". Such rhetoric may signal Kazakhstan's de facto refusal to comply with OPEC+ quotas and could mark the first step toward a formal withdrawal from the alliance, which is led by Saudi Arabia. Since 2022, OPEC+ members had agreed to cut output by 5.85 million barrels per day to stabilize prices within a $70-90 per barrel range. Production Growth Despite Restrictions Kazakhstan has consistently exceeded its production limits. In March 2025, the country produced 1.85 million barrels of oil per day, 26% above its established quota of 1.468 million barrels. This surge is attributed to the expanded development of the Tengiz field. Such non-compliance has reportedly irritated Saudi Arabia, which, according to IMF estimates, needs oil prices above $90 per barrel to balance its national budget. In early April, Riyadh responded by slashing oil prices for the Asian market and accelerating production increases, signaling its displeasure toward undisciplined alliance members. Analysts warn that if tensions escalate further, Saudi Arabia could resort to drastic measures, potentially triggering a global price war. The Danger of a Price War The specter of a repeat of 2014, when Saudi Arabia flooded the market to push out U.S. shale producers, looms large. Should OPEC+ collapse, a supply glut could cause oil prices to plummet. Countries with higher production costs, such as Kazakhstan, would be particularly vulnerable to such a scenario. Risks for Kazakhstan's Budget and the Tenge According to analysts, Kazakhstan faces significant fiscal risks. Economist Arman Beisembayev explained that citizens would not immediately feel the impact of a sharp decline in oil prices due to existing contracts, which typically take three to six months to fulfill. However, he cautioned that economic repercussions could begin to surface by the fall. Financial analyst Andrei Chebotarev predicted that falling oil revenues would necessitate a budget revision. The current state budget is based on an oil price of $75 per barrel and an exchange rate of 470 tenge per U.S. dollar. In reality, oil prices are trending toward $65, and the tenge has depreciated to 518 per dollar. “Most likely, the government will increase withdrawals from the National Fund and revise budget expenditures. Devaluation may also become inevitable to balance the budget under new realities,” Beisembayev added. Global Turbulence and Geopolitical Factors Experts highlight that the policies of U.S. President Donald Trump's administration, particularly the escalation of trade conflicts, have played a significant role in destabilizing global markets. Newly imposed U.S. tariffs have already dampened global oil demand. “For developed countries, cheap oil is a boon. But for Kazakhstan, it poses risks and a threat of recession,” Beisembayev added....