Abstract:
A long awaited deal – which could potentially stabilize
global oil prices - was reached on 10 December in
Vienna, between OPEC and non-OPEC oil producer
countries. The non-OPEC parties, which include
Russia, Azerbaijan and Kazakhstan, agreed to cut
oil production by 558,000 bpd (barrels per day).
Among the Caspian littoral state signatories, Russia’s
reduction commitment is the largest, at 300,000 bpd,
while Azerbaijan is cutting 35,000 bpd. Kazakhstan
- despite OPEC’s expectation of a 50,000 bpd
reduction - has agreed to a cut just 20,000 barrels
from the November 2016 level. Kazakhstan’s weaker
commitment to OPEC stems from the fact that in
recent months, its oil production and exports have risen.
This is partly because the Tengiz field has returned
to full production, while outputs from Kashagan - a
vast oil field in the Caspian – have been ramped up.
While both Azerbaijan and Kazakhstan may share expectations
of the resumption of stable world oil prices,
they have taken different approaches to the OPECnon-
OPEC deal, and the decline of oil prices has impacted each country differently. Furthermore, since the increase in production
at Kashagan, the two have a
common goal of exporting oil to European
markets. Previously Kazakh oil
was transported via the Baku-Tbilisi-
Ceyhan pipeline, but Kashagan field’s
commercial production will require a
new means of bilateral engagement.
