Kazakhstan, whose economy is largely based on the oil sector, is facing growing difficulties linked to the delays of several major projects. These delays directly affect its production objectives and compromise compliance with OPEC+ quotas. In 2024, national oil production is expected to reach around 98.2 million tonnes (MMt), an increase of only 4.94% compared to the previous year, an insufficient rate to compensate for the losses in 2023.
The situation is aggravated by scheduled maintenance of the Tengiz and Kashagan sites, two of the largest deposits in the country. These interventions, necessary to stabilize production, come at a time when the country already has to adjust its production to comply with OPEC+ quotas. The combination of these factors could slow national economic growth, while oil revenues represent 50% of total exports and nearly 30% of tax revenues.
Delays at Tengiz field
The Tengiz field, one of the country’s main producers, is experiencing a significant delay in its expansion project, known as the Future Growth Project (FGP). Initially planned for 2024, the full start-up of this project has now been pushed back to 2025, mainly due to disruptions linked to the COVID-19 pandemic and the technical complexity of the development. The budget for the operation, initially estimated at $36.8 billion, has already been revised upwards to reach $47 billion.
The economic impact of this delay is significant. If the FGP had respected its initial schedule, Tengiz production would have allowed an increase in national production of 7.7% per year, compared to only 4.94% forecast for 2024. Tengiz delays also limit export capacities of the country, knowing that this field largely supplies the CPC pipeline, a major axis for the export of crude to the Novorossiysk terminal in Russia.
Untapped potential of the Kashagan field
Kashagan, another strategic field for Kazakhstan, could compensate for production losses in Tengiz. Currently, this field produces around 20 MMt per year, but expansion plans are underway to increase this volume to 22 MMt by 2026. Part of this growth relies on the commissioning of new gas processing plants , built in partnership with Qatar UCC Holdings. These facilities will make it possible to process more gas and, therefore, increase crude production.
However, the realization of these projects depends largely on the resolution of financial disputes between the consortium partners operating the field and the Kazakh government. If negotiations fail, it could further delay work and compromise long-term production forecasts.
Consequences on exports and the economy
The cumulative delays at Tengiz and Kashagan have a direct impact on volumes exported via the Caspian Pipeline Consortium (CPC). In 2023, the CPC transported 56.1 MMt of crude, or 80.1% of Kazakhstan’s total production. In the absence of a rapid increase in production, the CPC may not reach full capacity, thereby affecting the country’s export earnings.
OPEC+ is closely monitoring Kazakhstan’s ability to meet its commitments. The country had already exceeded its quotas in the first half of 2024, forcing a reduction in production in the following months. This further complicates operations planning and could result in further sanctions from the organization if the country continues to exceed its thresholds.
Growth outlook for 2025
The situation remains uncertain for 2025. Current forecasts are based on the finalization of the Tengiz projects and the expansion of Kashagan. However, technical uncertainties and financial disputes could further push back these deadlines. If Kazakhstan can overcome these challenges, its production could return to a stable level of growth, strengthening its position in the global oil market.
