Kazakhstan’s Oil Production Drops 6% Following Terminal Damage

Kazakhstan’s oil and gas condensate production has decreased by 6 percent in the initial days of December, following a Ukrainian drone attack that damaged the Caspian Pipeline Consortium’s (CPC) Black Sea loading facility. This incident has disrupted operations at a critical infrastructure point that is responsible for transporting over 80 percent of Kazakhstan’s oil exports and handling more than 1 percent of the global oil supply.

The CPC pipeline, which stretches approximately 1,500 kilometers from Kazakhstan’s oil fields to the terminal at Novorossiysk, suspended its operations on December 2, 2023, after a mooring was damaged. Initially, the CPC operated two single point moorings (SPMs), but has since shifted to utilizing only one, with a third unit currently undergoing maintenance. Industry sources indicate that this shift has resulted in a significant drop in loading capacity, estimated at 900,000 tons per week.

Kazakhstan’s oil production fell to 1.9 million barrels per day during the first two days of December, a decline from the average output of the previous month. The country, which is the world’s 12th-largest oil producer, exported approximately 68.6 million tons of oil last year. The energy ministry of Kazakhstan did not respond to requests for comment regarding these developments.

Response from Officials and Industry Impact

Kazakhstan’s Deputy Energy Minister Yerlan Akbarov confirmed on December 4 that one of the CPC’s moorings at the Black Sea terminal is now fully operational, alleviating some concerns about oil transportation restrictions. Despite this, five industry sources informed Reuters that Kazakhstan plans to divert more crude oil through the Baku-Tbilisi-Ceyhan (BTC) pipeline during December due to reduced capacity at the CPC.

Kazakh oil producers are also utilizing routes to Russia’s Novorossiysk and Ust-Luga ports under the KEBCO brand, as well as shipping to Germany via the Druzhba pipeline. However, these alternatives generally yield lower profit margins and are contingent on the capacity of Russian pipeline operator Transneft. The ongoing situation poses a challenge for Kazakhstan, as options for rerouting oil remain limited, particularly in light of ongoing disruptions to Russia’s pipeline infrastructure from drone strikes.

The CPC pipeline’s primary suppliers are fields located in Kazakhstan, including the well-known Tengiz, Karachaganak, and Kashagan fields. As Kazakhstan navigates these disruptions, the implications for its oil production and export capabilities will be closely monitored by industry stakeholders globally.