Page 4 - FSUOGM Week 25

FSUOGM COMMENTARY FSUOGM

OPEC+ calls on laggards

to catch up

Kazakhstan missed its May quota by over 100,000 barrels per day

KAZAKHSTAN OPEC+’S ministerial panel is pressing on group or 101,000 bpd. Iraq’s oil ministry, meanwhile,
members Kazakhstan and Iraq to do more to has said it is “fully committed” to the OPEC+
WHAT: comply with output quotas, according to a draft deal, but pumped 600,000 bpd above its agreed
Kazakhstan has failing to statement by seen by Reuters. Pressure is on the limit last month, making it the worst offender.
meet its quotas under the pair to convince their partners that they can be Iraq is contending with a full-blown eco-
OPEC+ deal. trusted, ensuring that the group’s agreement on nomic crisis, making the cuts a difficult burden
unprecedented supply cuts remains intact. to bear. Complicating matters further, it has also
WHY: The group pledged to take a record 9.7mn had to negotiate the reductions with the autono-
Reasons for its non- barrels per day (bpd) of supply offline in May mous Iraqi Kurdistan region, which is also facing
compliance are unclear, and June, later agreeing to extend this cut until significant hardship.
but the government has the end of July. Overall compliance among For both Iraq and Kazakhstan, as well as
to negotiate the cuts OPEC+’s members has been surprisingly good, some other OPEC+ members, full compliance
with major international reaching 87% in May. with the deal is difficult because of the contrac-
consortiums. This is “a better percentage than most market tual agreements they have with international oil
participants really expected when the curtail- companies (IOCs).
WHAT NEXT: ments were first announced,” Oslo-based Rystad In Kazakhstan’s case, nearly 60% of liquids
If Kazakhstan and Energy analyst Bjornar Tonhaugen commented output comes from three internationally man-
especially Iran continue in a research note on June 18. “The high-level aged megaprojects: Karachaganak, Kashagan
to miss the mark, the deal compliance is a song to the traders’ ears, who and Tengiz. Karachaganak flows mainly con-
could be at risk. have been worried that words may have been densate, which is exempt from the cuts deal,
too good to be true.” but Kashagan and Tengiz have both confirmed
However, Kazakhstan and Iraq have faced reductions in supply. The Chevron-led consor-
criticism for failing to live up to their promises on tium operating Tengiz said on June 19 it was
cuts. Speaking on June 9, Kazakh Energy Minis- imposing cuts in line with government legisla-
ter Nurlan Nogayev conceded that Kazakhstan tion covering both May and June. As such, there
had exceeded its quota by 3.13mn barrels in May, is some uncertainty about where the blame for

P4 www. NEWSBASE .com Week 25 24•June•2020