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China is projected to buy an ever-increasing share of Kazakh and Central Asian energy in the coming years.12 July 2017
The move was not unexpected. Energy Minister Kanat Bozumbaev admits that Kazakhstan will complete its withdrawal from the cap over the next two months, EurasiaNet.org reports, citing TASS.
OPEC members and other oil-producing countries, including Kazakhstan, agreed in November to reduce daily output by 1.8 million barrels in a bid to nudge prices higher. They later decided to extend the cap until March 2018.
Rather than falling, oil production this year is likely to exceed the previous projected volume of 81 million tons, or about 578 million barrels, Bozumbaev said at a weekend industry conference in Istanbul, according to EurasiaNet.
Much of its oil output in the coming years may well be destined for China rather than its traditional Western customers.
China’s share of the Kazakh energy market is rising steadily as its economic footprint continues to deepen across Central Asia. Independent experts estimate China’s share of annual oil production at around 40 percent, Kazakh oil analyst Sergei Smirnov told bne Intellinews. The official figure is about 25 percent.
If current trends continue, China could be absorbing half of Central Asia’s oil and gas exports in just three years, according to the International Energy Agency. However, Western oil majors such as Chevron, Exxon Mobil and Eni still account for most of Kazakhstan’s oil production.
Smirnov said the perception that China’s appetite for buying up Kazakh energy companies was triggered by low energy prices is misled. In fact Chinese companies have often paid up to twice the real value for shares in Kazakh companies, he said.
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