Middle East

Prince Abdulaziz and other officials during a visit to the Neutral Zone

Prince Abdulaziz and other officials during a visit to the Neutral Zone

Riyadh, Kuwait strike deal on shared zone

DUBAI/KUWAIT

With the deal on the Neutral Zone ending a five-year dispute between Saudi Arabia and Kuwait, the Khafji oil field is expected to pump in 320,000 bpd at 2020-end

 

Kuwait and Saudi Arabia last month agreed to end a five-year dispute over their shared Neutral Zone in a deal which will allow production to resume at two oilfields that can pump up to 0.5 per cent of the world’s oil supply.

The Gulf neighbours had halted production at the Khafji and Wafra fields, which together produce some 500,000 barrels of oil a day (bpd), in 2014 and 2015, respectively.

A day after signing a deal, Saudi Energy Minister Prince Abdulaziz bin Salman announced the Khafji oil field would produce 320,000 oil barrels per day (bpd) at the end of 2020, Saudi-owned Al Arabiya TV reported.

US oil company Chevron, which jointly operates the Wafra field with the Kuwait Gulf Oil Company (KGOC) on behalf of Saudi Arabia, said it expected it to return to full production within 12 months.

Kuwaiti Foreign Minister Sheikh Ahmad Nasser Al Mohammad Al Sabah and the Saudi Energy Minister signed the agreements in Kuwait, state news agency KUNA said.

“With the signing of this new accord, both parties have reached consensus that now is the right time to resume production in this zone,” Amin Nasser Saudi Aramco President and CEO said.

Prince Abdulaziz last month also said that resuming production from the oilfields would not affect commitments by the Organization of the Petroleum Exporting Countries and other major oil producers (Opec+) to curb crude output. Kuwaiti Oil Minister Khaled al-Fadhel echoed that view at a ceremony at Wafra.

Kuwaiti oil market analyst Kamel Al Haramy said the two countries are not in a rush to resume production from the neutral zone oilfields due to the production cuts agreement so it will take easily up to six months.

A former senior official in Kuwait’s Gulf Oil Company, which operates the Khafji field alongside AGOC, a subsidiary of Saudi state oil firm Saudi Aramco, said he expected production to resume there first.




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