Expert Warns CPC Shutdown Could Prove Costly for Kazakhstan and Force Production Cuts

The temporary shutdown of two single-point mooring units (SPM) of the Caspian Pipeline Consortium (CPC) could be costly for Kazakhstan and force a sharp reduction in oil production, according to oil and gas industry expert Olzhas Baidildinov, Orda.kz reports.

Writing on his Telegram channel "Baidildinov. Oil," the analyst predicts that Kazakhstan will begin to cut oil production within a week. Other outlets, including Reuters, have also reported that the country may soon be forced to reduce output.

Pumping via the CPC (oil from Kazakhstan and Russia) in January was 4.8 million tons, 5.5 million tons in February and about six million tons in March (the plan for April was 6.5 million tons). The suspension of operation of two of the three SPUs will certainly affect the volumes of shipment to sea tankers. The statement of the Ministry of Energy of the Republic of Kazakhstan that shipment is carried out in the normal mode should be read verbatim — this is shipment here and now, Olzhas Baidildinov points out. 

While the consortium has the capacity to store over one million tons of oil, that storage is expected to fill up within a week.

After that, production will need to be scaled back at Kazakhstan’s three largest fields: Tengiz, Kashagan, and Karachaganak. Although this may align with OPEC+ goals to ensure quota compliance, Baidildinov stresses that such a scenario harms Kazakhstan’s economy.

If we assume that Kazakhstan shipped about five million tons of oil via CPC, then half of this volume is 2.5 million tons, or more than 18 million barrels, with a market value of over $1.2 billion. About 30% of this amount could be monthly losses (about $400 million) for the budget and the National Fund of the Republic of Kazakhstan,
Olzhas Baidildinov writes. 

The expert notes that oil companies, in particular, will feel the impact. Temporary halts in production and restarting operations pose logistical and financial challenges, often leading to additional, unplanned costs.

The two tanker-loading units at the CPC marine terminal were shut down following an unscheduled inspection triggered by a fuel oil spill in the Kerch Strait. 

Meanwhile, Kazakhstan has reportedly set another oil production record — but with the CPC facing operational limits, finding an outlet for the surplus may prove difficult.

Original Author: Nikita Drobny