Loading prices...

Register/Sign in
oilmonster
Crude Oil May 15, 2024 03:00:09 AM

Kazakhstan Opens Thorny Debate on 2025 OPEC+ Oil Quotas

Anil
Mathews
OilMonster Author
Top OPEC+ member Russia has effectively seen its production capacity reduced by the war in Ukraine and Western sanctions.
Kazakhstan Opens Thorny Debate on 2025 OPEC+ Oil Quotas

SEATTLE (Oil Monster):   Kazakhstan opened on Tuesday a thorny debate on OPEC+ production levels, saying it believed it should be allowed to pump more oil in 2025, when all current output cuts by the producer group are due to expire.

Kazakhstan's comments reported by Interfax come as OPEC+ prepares to meet on June 1. The group has also ordered a review of members' oil output capacity to set reference production levels for next year. The review is due by the end of June.

The subject of reference production numbers and quotas has often caused tension at OPEC+, affecting its unity and weighing on oil prices. The last showdown happened in November 2023 when OPEC+ delayed a meeting by several days due to heated discussions and member Angola left the group.

OPEC+ has tasked three companies - IHS, Wood Mackenzie and Rystad Energy - to assess the capacities of all members to be used for reference production - the figures from which output cuts or increases are calculated - from 2025. The reviews are due to take place by end-June.

As a result, the issue will not come up at the June 1 meeting, five OPEC+ sources said, allowing the group to decide policy for the rest of 2024 with more ease. But it also means the June meeting will not give the market much guidance on policies for 2025, when all current cuts expire.

"The figures on production capacities will not be presented at the June meeting," said one of the OPEC+ sources, who declined be identified. "The reason is that some countries have not fully concluded their discussions with secondary sources".

OPEC and Woodmac did not immediately respond to a Reuters request for comment. Rystad and IHS declined to comment.

Following the Interfax report, Kazakhstan's energy ministry said it had not requested a higher oil production level for 2025.

The need for new quotas comes as members, such as the United Arab Emirates and Iraq, expand their production capacity while the biggest OPEC producer, Saudi Arabia, has this year scaled back additions to its output potential.

Top OPEC+ member Russia has effectively seen its production capacity reduced by the war in Ukraine and Western sanctions.

Oil is the main source of income for most OPEC+ members but their budget needs differ wildly making them either supporters of higher oil prices amid lower production or higher production amid lower prices, which complicates discussions.

The UAE has long lobbied to raise its output within the OPEC+ agreement and this month it announced another hike in its oil capacity to 4.85 million barrels per day (bpd) - almost 2 million bpd higher than its current production target.

The UAE should gain up to 180,000 bpd of more capacity through 2027, while Kazakhstan is in the middle of deploying 80,000 bpd of new capacity, JP Morgan estimates. Iraq can add another 50,000-75,000 bpd.

Meanwhile, Saudi Arabia scrapped plans earlier this year to boost its capacity to 13 million from 12 million bpd. Its oil monopoly Saudi Aramco has also been paying a special dividend to the government amid rising budget needs.

 Courtesy: www.reuters.com


×

Quick Search

Advanced Search