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[size=35][size=35]Can Iraq and Kazakhstan adjust oil production pace in line with OPEC+ quotas?[/size][/size]
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2024-08-31 | 03:50
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According to data published by the Washington-based Energy Platform, which included monitoring production excesses during the first 7 months of this year (2024), Baghdad’s average excess production during these months amounted to 1.4 million barrels per day.
The data estimated the cumulative increase in Kazakh oil production, in excess of OPEC+ quotas, at about 100,000 barrels per day.
The two countries took the initiative to put forward a plan supported by measures to reduce production and compensate for the increases in their share in the alliance.
OPEC+ cuts
Iraq and Kazakhstan are trying to adjust the pace of production in line with the OPEC+ quotas, amid fluctuations in oil prices and demand expectations.
OPEC+ cuts are divided into three types; the first type is a reduction that includes all member states by about two million barrels per day, which began to be implemented in October 2022 and continues until the end of next year (2025), according to the alliance’s decisions issued last June. The
second type is a voluntary reduction committed by member states, ranging in the range of 1.65 million barrels per day, which began in May of last year and is scheduled to end in conjunction with the mandatory reduction at the end of next year, after these countries extended its implementation.
The third type is an additional voluntary reduction approved by some countries since the beginning of this year by 2.2 million barrels per day, which will be in effect until the end of the third quarter of the year (in September), and from October the gradual pumping of quantities will begin for a year.
In the midst of these attempts by the alliance to control supply in the global oil market and price levels, Iraq and Kazakhstan are struggling to adhere to production quotas, and it seems that there will be measures implemented in the coming period to curb the increases.
* Features of the two countries’ plan to compensate for the cumulative increases and ensure compliance with the quotas decided later.
Compensating for Iraq’s share
Compensation and procedures
Iraq’s production share is estimated at about 4 million barrels per day, but OPEC+ data indicates that[You must be registered and logged in to see this link.]It produced (during the months from January to July) an average cumulative excess rate of 1.4 million barrels per day.
The Gulf state’s production last month reached 4.25 million barrels per day, according to data published by the Energy Intelligence platform.
The compensation plan approved by the Iraqi Oil Ministry is scheduled to last for a year until September next year, supported by a package of measures that include 4 steps: (reducing production, adjusting the timing of spot shipments and reducing exports, reducing local consumption, and reviewing Kurdistan’s oil production).
To urge Iraq to implement its plans, OPEC Secretary-General Haitham Al-Ghais visited Baghdad and met with Oil Minister Hayan Abdul-Ghani.
Abdul-Ghani confirmed his country’s commitment to adjusting production levels to ensure meeting the OPEC+ quota, by developing a compensation plan.
Production, Exports, and Consumption
The plan to compensate for the additional increases begins with reducing production during the month of September, to between 3.85 million and 3.9 million barrels per day.
The rate of reduction will be gradual, from 90,000 barrels per day this month, to 120,000 barrels per day by next January.
In addition to the expected production cut next month, it has postponed[You must be registered and logged in to see this link.]Exporting a spot oil shipment of 1 million barrels, from August to next month, and the same applies to two additional shipments of the same sizes.
Iraq reduced crude exports[You must be registered and logged in to see this link.]By postponing the three aforementioned shipments to next month.
Iraq seeks to reduce exports from 3.43 million barrels per day last July to 3.3 million barrels in September.
It is also heading[You must be registered and logged in to see this link.]To reduce domestic consumption to between 500,000 and 570,000 barrels per day, especially in light of the increase in gas supplies to power plants, and the reduction in the operating rate of refineries.
Kurdistan Oil
Estimates of Kurdistan’s oil production (a semi-autonomous region of Iraq) vary; the state oil marketing company “SOMO” estimates it at about 150,000 barrels per day, while research companies and analysts estimate it at twice that rate, at 300,000 barrels per day. The
OPEC+ compensation plan includes obligating the regional government to reduce production by 100,000 barrels per day, from 150,000 to 50,000 barrels.
The government is heading[You must be registered and logged in to see this link.]To stop financial transfers to the regional government (budget), in the event of non-compliance with the required reduction rate.
Iraq's representative to OPEC, Mohammed Adnan Ibrahim Al-Najjar, confirmed that consultations are underway with the region to push it to commit to producing only 50 thousand barrels per day, noting that the government[You must be registered and logged in to see this link.]It will stop providing the region with its share of the budget until it adheres to the stipulated oil production quota.
It relies on[You must be registered and logged in to see this link.]On the Kurdistan Region to support the production cut plan, while Al-Najjar showed flexibility in the possibility of proposing another compensation plan if the current plan with its 4 axes does not succeed.
Compensating for Kazakhstan's share
Kazakhstan produced an average of 1.6 million barrels per day during the first 7 months of this year, indicating more than 100,000 barrels per day more than its share in the OPEC+ alliance.
In addition to other factors it plans to implement, Kazakhstan aims to reduce its production to 1.21 million barrels per day.
Kazakhstan is implementing the compensation and production cut plan, starting next October.
The production cut includes dispensing with a fifth of the production of the "Tengiz" field, and the full production of the "Kashagan" offshore field.
Kazakhstan relies in its plan to compensate for the excess of its share within the alliance on its largest oil fields undergoing maintenance work.
This includes the 650,000-bpd Tengiz field operated by US company Chevron, which is undergoing maintenance work that will reduce its production by 95,000 bpd, or 3.8 million bpd, over the 40-day maintenance period (from August 1 to September 10). Starting
from October 3, the Kashagan offshore field, which is co-developed by Shell, Italy’s Eni, TotalEnergies and ExxonMobil, will stop working.
The field’s production usually ranges between 400,000 and 450,000 bpd, and during the scheduled 40-day maintenance period, Kazakhstani oil will lose 16 million bpd from the field. The
timetable includes compensating for the excess quotas by cutting production by 18,000 bpd in July, 49,000 bpd this month, 28,000 bpd in August, 265,000 bpd in October, 32,000 bpd in November and 54,000 bpd in December.
The decline in production is reflected in export plans, but Kazakhstan aims to establish an oil production boom by 2028, with a development plan in cooperation with international companies.
Source: Energy Platform
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2024-08-31 | 03:50
[You must be registered and logged in to see this image.]
202 views
News - Economy
OPEC+ quotas face a dilemma with Iraq and Kazakhstan after implementing official and voluntary cuts, as they exceeded the established production quotas, which contradicts the alliance’s direction to reduce production and control the markets.
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[/ltr]
According to data published by the Washington-based Energy Platform, which included monitoring production excesses during the first 7 months of this year (2024), Baghdad’s average excess production during these months amounted to 1.4 million barrels per day.
The data estimated the cumulative increase in Kazakh oil production, in excess of OPEC+ quotas, at about 100,000 barrels per day.
The two countries took the initiative to put forward a plan supported by measures to reduce production and compensate for the increases in their share in the alliance.
OPEC+ cuts
Iraq and Kazakhstan are trying to adjust the pace of production in line with the OPEC+ quotas, amid fluctuations in oil prices and demand expectations.
OPEC+ cuts are divided into three types; the first type is a reduction that includes all member states by about two million barrels per day, which began to be implemented in October 2022 and continues until the end of next year (2025), according to the alliance’s decisions issued last June. The
second type is a voluntary reduction committed by member states, ranging in the range of 1.65 million barrels per day, which began in May of last year and is scheduled to end in conjunction with the mandatory reduction at the end of next year, after these countries extended its implementation.
The third type is an additional voluntary reduction approved by some countries since the beginning of this year by 2.2 million barrels per day, which will be in effect until the end of the third quarter of the year (in September), and from October the gradual pumping of quantities will begin for a year.
In the midst of these attempts by the alliance to control supply in the global oil market and price levels, Iraq and Kazakhstan are struggling to adhere to production quotas, and it seems that there will be measures implemented in the coming period to curb the increases.
* Features of the two countries’ plan to compensate for the cumulative increases and ensure compliance with the quotas decided later.
Compensating for Iraq’s share
Compensation and procedures
Iraq’s production share is estimated at about 4 million barrels per day, but OPEC+ data indicates that[You must be registered and logged in to see this link.]It produced (during the months from January to July) an average cumulative excess rate of 1.4 million barrels per day.
The Gulf state’s production last month reached 4.25 million barrels per day, according to data published by the Energy Intelligence platform.
The compensation plan approved by the Iraqi Oil Ministry is scheduled to last for a year until September next year, supported by a package of measures that include 4 steps: (reducing production, adjusting the timing of spot shipments and reducing exports, reducing local consumption, and reviewing Kurdistan’s oil production).
To urge Iraq to implement its plans, OPEC Secretary-General Haitham Al-Ghais visited Baghdad and met with Oil Minister Hayan Abdul-Ghani.
Abdul-Ghani confirmed his country’s commitment to adjusting production levels to ensure meeting the OPEC+ quota, by developing a compensation plan.
Production, Exports, and Consumption
The plan to compensate for the additional increases begins with reducing production during the month of September, to between 3.85 million and 3.9 million barrels per day.
The rate of reduction will be gradual, from 90,000 barrels per day this month, to 120,000 barrels per day by next January.
In addition to the expected production cut next month, it has postponed[You must be registered and logged in to see this link.]Exporting a spot oil shipment of 1 million barrels, from August to next month, and the same applies to two additional shipments of the same sizes.
Iraq reduced crude exports[You must be registered and logged in to see this link.]By postponing the three aforementioned shipments to next month.
Iraq seeks to reduce exports from 3.43 million barrels per day last July to 3.3 million barrels in September.
It is also heading[You must be registered and logged in to see this link.]To reduce domestic consumption to between 500,000 and 570,000 barrels per day, especially in light of the increase in gas supplies to power plants, and the reduction in the operating rate of refineries.
Kurdistan Oil
Estimates of Kurdistan’s oil production (a semi-autonomous region of Iraq) vary; the state oil marketing company “SOMO” estimates it at about 150,000 barrels per day, while research companies and analysts estimate it at twice that rate, at 300,000 barrels per day. The
OPEC+ compensation plan includes obligating the regional government to reduce production by 100,000 barrels per day, from 150,000 to 50,000 barrels.
The government is heading[You must be registered and logged in to see this link.]To stop financial transfers to the regional government (budget), in the event of non-compliance with the required reduction rate.
Iraq's representative to OPEC, Mohammed Adnan Ibrahim Al-Najjar, confirmed that consultations are underway with the region to push it to commit to producing only 50 thousand barrels per day, noting that the government[You must be registered and logged in to see this link.]It will stop providing the region with its share of the budget until it adheres to the stipulated oil production quota.
It relies on[You must be registered and logged in to see this link.]On the Kurdistan Region to support the production cut plan, while Al-Najjar showed flexibility in the possibility of proposing another compensation plan if the current plan with its 4 axes does not succeed.
Compensating for Kazakhstan's share
Kazakhstan produced an average of 1.6 million barrels per day during the first 7 months of this year, indicating more than 100,000 barrels per day more than its share in the OPEC+ alliance.
In addition to other factors it plans to implement, Kazakhstan aims to reduce its production to 1.21 million barrels per day.
Kazakhstan is implementing the compensation and production cut plan, starting next October.
The production cut includes dispensing with a fifth of the production of the "Tengiz" field, and the full production of the "Kashagan" offshore field.
Kazakhstan relies in its plan to compensate for the excess of its share within the alliance on its largest oil fields undergoing maintenance work.
This includes the 650,000-bpd Tengiz field operated by US company Chevron, which is undergoing maintenance work that will reduce its production by 95,000 bpd, or 3.8 million bpd, over the 40-day maintenance period (from August 1 to September 10). Starting
from October 3, the Kashagan offshore field, which is co-developed by Shell, Italy’s Eni, TotalEnergies and ExxonMobil, will stop working.
The field’s production usually ranges between 400,000 and 450,000 bpd, and during the scheduled 40-day maintenance period, Kazakhstani oil will lose 16 million bpd from the field. The
timetable includes compensating for the excess quotas by cutting production by 18,000 bpd in July, 49,000 bpd this month, 28,000 bpd in August, 265,000 bpd in October, 32,000 bpd in November and 54,000 bpd in December.
The decline in production is reflected in export plans, but Kazakhstan aims to establish an oil production boom by 2028, with a development plan in cooperation with international companies.
Source: Energy Platform
[You must be registered and logged in to see this link.]
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