Kazakhstan’s Oil Production Drops 6% Following Drone Attack

Kazakhstan’s oil and gas condensate production experienced a significant decline of 6 percent in the first two days of December 2023. This drop is attributed to a Ukrainian drone attack on the Caspian Pipeline Consortium’s (CPC) loading facility along the Black Sea. The CPC pipeline is crucial for Kazakhstan, transporting over 80 percent of its oil exports and accounting for more than 1 percent of global supply.

The CPC suspended operations on December 2 after a mooring at its terminal near Russia’s Novorossiysk port was damaged. Although operations have since resumed using a single-point mooring (SPM), the facility typically operates with two. A third SPM is currently under maintenance, which began prior to the drone strikes. According to industry estimates, Kazakhstan’s production fell to 1.9 million barrels per day from an average output in November.

Kazakhstan’s energy ministry has yet to respond to requests for comment regarding the situation. The reduced oil production highlights the ongoing impact of the CPC drone attack on Kazakhstan, a member of OPEC+ and the world’s 12th-largest oil producer. Last year, Kazakhstan exported approximately 68.6 million tons of oil.

Impact on Export Routes and Future Strategies

The CPC’s 1,500 km (about 930 miles) pipeline is the main artery for transporting crude from Kazakhstan’s major fields, including Tengiz, Karachaganak, and Kashagan. In light of the current disruptions, Kazakhstan’s Deputy Energy Minister Yerlan Akbarov stated that one of the moorings at the Black Sea terminal is now fully operational, and there are no restrictions for oil transportation.

Despite this reassurance, industry sources indicate that Kazakhstan plans to divert more crude through the Baku-Tbilisi-Ceyhan (BTC) pipeline in December due to limited capacity at the CPC. Other routes include shipments to Russia’s Novorossiysk and Ust-Luga ports under the KEBCO brand and to Germany via the Druzhba pipeline. However, these alternatives typically yield lower margins and rely heavily on the capacity of Russian pipeline operator Transneft.

Options for rerouting oil from landlocked Kazakhstan are constrained, especially given that Russia’s pipeline infrastructure has been stretched due to repeated drone strikes on its refineries and export facilities. An industry source has estimated that utilizing only one SPM at CPC results in a loading capacity loss of approximately 900,000 tons per week.

As Kazakhstan navigates through these challenges, the effects on its oil production and export capacity will be closely monitored by industry analysts and stakeholders worldwide.