Kazakhstan will cut oil production at large and medium-sized fields, including the giant Tengiz and Kashagan, by 22% in May-June as part of the OPEC+ deal; four industry sources told Reuters.
According to them, the government of Kazakhstan signed the corresponding decree on Monday.
The Kazakh Ministry of Energy did not respond to a request for comment from Reuters.
Kazakhstan has committed to reducing oil production in May-June 2020 under the OPEC + deal by 390.000 barrels per day – about 23%.
Reuters sources who were able to get acquainted with the decree said that the document sets the maximum allowable production volumes for oil producers in the Republic for May and June this year.
The maximum production figure is determined by a formula that takes into account the actual average daily volumes of oil production and exports for the first quarter of this year; the interlocutors told Reuters.
The delay in issuing the government decree will force companies to reduce production more actively in May and June, as Kazakhstan was initially expected to start cutting production from the beginning of this month.
Kazakhstan announced restrictions on oil production in some medium-sized, large and giant fields on May 1, but the release of the relevant government decree was delayed.
Reuters sources indicate that the document will lead to a revision of the may schedule for oil exports via the Caspian pipeline consortium (CPC) pipeline.
“The resolution came out, the volume of production cuts is prescribed, but it is not clear how to do it: in the third decade of May, most of the CPC Blend cargo has already been sold, tankers are chartered,” a source in trade circles shares concerns.
CPC planned to increase CPC Blend oil exports in May to 5.73 million tons from 5.31 million tons in April.
The CPC main pipeline connects the Tengiz field in Western Kazakhstan and some other areas with the Yuzhnaya Ozereyevka sea terminal near Novorossiysk. This route transports more than two-thirds of all Kazakhstan’s export oil, as well as raw materials from Russian fields, including those located on the Caspian Sea.