Kashagan oil field is back online, but no threat to oil market rebalancing - IHS Markit

The massive Kashagan oil field in Kazakhstan is scheduled to restart its production tomorrow and may start oil export from its large Kashagan field through Azerbaijan in 2017.

Spencer Welch, Oil Markets Director at IHS Markit says the fresh supplies from Kashagan field do not pose a risk to oil market rebalancing since it is going to be a slow ramp up. In the short-run the production is likely to be only 20K barrels per day. The oil field is seen producing 300K barrels by end of 2017.

Welch also details the current oil market dynamics and says the major producers are unlikely to reach a consensus at the upcoming Algeria meeting.

Key points:

Increased supplies from Libya and Nigeria pose a greater risk to oil market rebalancing

Cost of accessing oil has gone down, there have been an awful lot of delays due to lower prices

Kashagan field is a significant project but is unlikely to be the next Saudi Arabia

No threat of political instability in Kazakhstan. The problem is more due to climate, operating environment and type of crude being explored which is full of Sulfur