OPEC Chief Visits Astana, Expert Comments

On June 3, Kazakhstan’s Minister of Energy, Yerlan Akkenzhenov, held a meeting in Astana with Haitham al-Gais, Secretary General of OPEC, the Ministry announced, Orda.kz reports.

Oil analyst Olzhas Baidildinov offered his take in a post on Telegram, noting the ministry’s press release lacked detail beyond a familiar line: that Akkenzhenov “once again confirmed Kazakhstan’s commitment to the OPEC+ agreement.”

Haitham al-Gais is a Kuwaiti politician and oil specialist. He held senior positions in the national company Kuwait Petroleum, and since July 5, 2022, he has held the post of head of the Organization of the Petroleum Exporting Countries. Last year, the Secretary General already flew to Kazakhstan. Prime Minister Olzhas Bektenov and OPEC Secretary General Haitham al-Gais met in August, where the Prime Minister emphasized: 'Kazakhstan is committed to further cooperation within OPEC+. We support the organization’s initiatives, accept restrictions along with other countries, including on current voluntary commitments,'Baidildinov recalled. 

He questioned the purpose of the visit:

It is also unlikely that he flew to Astana to praise Kazakhstan for 'joint efforts to ensure stability in the global oil market.' It is obvious that the visit and meeting were devoted to changing the rhetoric of Kazakhstan, which previously announced that it would fulfill and catch up with quotas, then declared that it would be guided by national interests, and now again emphasizes: we are ready to make joint efforts, Baidildinov concluded.

According to him, Kazakhstan may be under pressure to address discrepancies in its production costs.

Last year, the NCOC consortium working at Kashagan paid only $3.3 per barrel in state payments, far less than investors in Tengiz and Karachaganak, who paid $26–30 per barrel.

You must agree that for Kazakhstan, the loss of taxes/payments of three dollars per barrel from production of 17.4 million tons is much less than the loss due to a decrease in world prices by approximately 10 dollars per barrel and the country’s total production of 88 million tons,he added. 

Baidildinov suggests al-Gais may have urged Akkenzhenov to press foreign investors and consider revisiting the terms of production sharing agreements.

Under the previous minister, Almasadam Satkaliyev, Kazakhstan routinely stated its commitment to OPEC+ while frequently exceeding quotas.

Akkenzhenov has followed a similar pattern, and his latest statements about increasing output regardless of expectations may reflect ongoing disputes with the organization.

Original Author: Nikita Drobny