By Charles Kennedy – May 06, 2025, 3:00 PM CDT
Kazakhstan’s oil firm KazMunayGas says it is fully prepared for oil price volatility.
National oil fund revenues have dropped 43% year-on-year, and Kazakhstan may need to tap into the fund again by fall to cover government spending as lower oil prices offset higher output.
The country is pushing ahead with refinery upgrades and international energy partnerships.
Kazakhstan’s national oil company KazMunayGas (KMG) says it is fully prepared to navigate recent oil price volatility, even as global benchmarks hit new lows and concerns mount over falling state revenues.
Despite the slump, driven largely by OPEC+ plans to increase output, KMG Deputy Chairman Aset Magauov stated that the company remains confident in its resilience.
“We don’t see any risks for KazMunayGas,” Magauov told reporters at a recent briefing. “We’ve prepared for various scenarios and identified cost-optimization measures. In principle, we are ready for any fluctuations.”
KMG, responsible for 26% of Kazakhstan’s total oil production and 80% of domestic refining, supplies about 70% of its crude to the local market. Because domestic fuel prices remain significantly lower and more stable than export prices, the company says much of its revenue is shielded from global price swings.
“Domestic sales remain unaffected by market volatility,” Magauov said. “Nearly all our gasoline and diesel production is sold inside Kazakhstan, further insulating us from export-driven shocks.”
Still, external pressures are mounting. Kazakhstan was the largest OPEC+ over-producer in recent months, and according to a research note from Halyk Finance, the country may be forced to make additional withdrawals from its National Oil Fund by the fall. Revenue from the fund fell by 43% year-on-year through April, as increased output failed to compensate for falling prices. The shortfall could complicate the government’s budget plans later this year.
At the same time, Kazakhstan is pursuing a series of strategic initiatives to strengthen its oil sector. These include ongoing talks with Russia’s Tatneft over a potential joint development of the Atyrau refinery and plans to privatize state stakes in the Atyrau and Pavlodar refineries — a move that could reshape the country’s refining landscape.
Kazakhstan is also advancing energy diplomacy. It is working to increase crude exports through the Baku-Tbilisi-Ceyhan (BTC) pipeline under a pilot deal with Azerbaijan, and recently signed a strategic energy partnership with Vietnam focused on both hydrocarbons and clean energy.
Looking ahead, the government has ambitious long-term plans. In April, Energy Minister Yerlan Akkenzhenov announced that Kazakhstan aims to more than double its domestic refining capacity from 17.9 million tons in 2024 to 38 million tons annually by 2040.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com
OPEC+ Stuns Market With Larger Than Expected Output Hike Weak Chinese Imports Sink Asia’s Coal Prices to Four-Year Low Shale Major Sees U.S. Oil Production Peaking
Download The Free Oilprice App Today
Back to homepage
https://oilprice.com/Energy/Crude-Oil/Revenue-Shock-Looms-for-Kazakhstan-Despite-Strong-Oil-Output.html
