Kazakhstan presents new internal challenge for OPEC+ in 2025

OPEC+ faces a variety of external challenges in 2025, including weak oil demand growth, rising production from competitors, and the return of Donald Trump to the White House promoting increased drilling.

However, the cartel also faces internal threats, with one of its members eager to ramp up production despite OPEC+ limits. In the early 2000s, it was Algeria; in the 2010s, Iraq; and more recently, the UAE. Next year, Kazakhstan will be the member challenging the cartel, Caliber.Az reports per foreign media.

Kazakhstan, which joined OPEC+ in 2016, has consistently exceeded its production quotas, and this will intensify in 2025 when the expansion of the Tengiz oilfield, the country’s largest, comes online. This $45 billion project, nearly a decade in the making, is expected to add around 260,000 barrels per day (bpd) starting mid-2025, contributing significantly to global oil supply. If fully allowed to produce, Kazakhstan’s total oil output, including condensates, could surpass 2 million bpd, marking a record for the country.

Kazakhstan had hoped for an increase in its OPEC+ quota to accommodate the new oil from Tengiz. However, the cartel’s plan to gradually raise quotas in late 2024 and into 2025 has been delayed due to falling oil prices, with the next meeting scheduled for Sunday to discuss further pauses. A delay in quotas would force Kazakhstan to either limit production at Tengiz or cut output from other, more costly fields to meet OPEC+ restrictions.

The country’s government may choose to increase production regardless of OPEC+ quotas, following the example of the UAE and Iraq, which have exceeded their limits in the past. This has already led to tensions within OPEC+, with Kazakhstan producing beyond its allocated limits in recent months. In August, OPEC+ Secretary-General Haitham Al Ghais visited Kazakhstan to address the situation, but further increases would escalate the conflict.

The timing of OPEC+’s quota adjustments is crucial for Kazakhstan. Chevron, which operates the Tengiz field, expects the expansion to begin producing oil in the first half of 2025. If the delay in quota increases is short—until the end of Q1—it may not significantly impact Kazakhstan. 

However, a delay until Q2 could create a direct clash between the country and OPEC+. Previous internal conflicts, like those between the UAE and Saudi Arabia in 2021, show the potential for infighting within the group. If Kazakhstan continues to defy quotas, it could follow Angola's example from 2023 and eventually leave OPEC+.

By Vafa Guliyeva