May 11, 2020 / 2:36 PM / in 2 months

UPDATE 1-Kazakhstan signs decree to cut oil output under OPEC+ deal - sources

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By Alla Afanasyeva, Olga Yagova and Gleb Gorodyankin

MOSCOW, May 11 (Reuters) - The Kazakh government signed a decree on Monday to cut oil output from May onwards in line with a deal agreed last month by the OPEC+ producer group, four sources familiar with the matter told Reuters.

The country had pledged to cut output by 390,000 barrels per day in May and June under the OPEC+ deal agreed in April.

Kazakhstan has ordered producers in large and mid-sized oil fields, including Tengiz, operated by Tengizchevroil (TCO) and Kashagan, operated by North Caspian Operating Company (NCOC), to cut oil output by around 22% in the May to June period, the sources said.

Kazakhstan’s Energy Ministry did not immediately respond to a Reuters request for comment.

TCO and NCOC declined to comment on the oil output cuts. TCO said that the company “continues to produce according to the business plan approved by the company’s shareholders”.

Reuters had previously reported that Kazakhstan was close to a deal with the foreign operators of its Tengiz and Kashagan oilfields that account for more than half of the state’s oil output to reduce production from May.

The Kashagan consortium includes Eni, ExxonMobil , CNPC, Royal Dutch Shell, Total , Inpex and Kazakh state energy firm KazMunayGaz.

TCO is owned by Chevron, ExxonMobil, Russia’s Lukoil and KazMunayGaz.

The oil output cuts under the Kazakh government’s decree are calculated individually for each producer using a formula based on daily oil production and export levels during the first quarter of 2020, the sources said, citing the document.

The production cuts will have a major effect on Kazakhstan’s flagship export oil grade CPC Blend, three of the sources said.

CPC Blend loading plan for May was only slightly revised down from 5.73 million tonnes in a preliminary version to 5.5 million tonnes in a revised version.

The loading plan is expected to be revised more significantly and the loading of some cargoes may be cancelled or diverted to June, the sources said.

Market participants said they expected the CPC Blend loading plan for June to be released shortly. (Editing by Jan Harvey and Jane Merriman)

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