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23 January 2020
BUSINESS

Kuwait to resume oil output from the neutral zone by March 2020

Kuwait’s parliament voted to ratify the agreement the country reached with Saudi Arabia in December 2019 to resume production at their shared oil deposits

The region contains two main oil fields: the onshore Wafra and offshore Khafji/iStock

by Bloomberg

Kuwait plans to restart oil production by March 2020 at the Wafra field that it shares with Saudi Arabia, more than four years after the neighbours halted output.

Wafra has been shut since May 2015, due to a dispute over Saudi Arabia’s renewal of Chevron’s concession there.

Fields in the so-called neutral zone can produce as much as 500,000 barrels a day—more than each of Organisation of Petroleum Exporting Countries’ (OPEC) three smallest members pumped last month.

Kuwaitis and Saudis alike have said a resumption would be unlikely to add significant amounts of oil to the market within the current duration of the OPEC’s production cuts deal, which runs until the end of March 2020.

The neutral zone, spanning more than 5,700 km was created by a 1922 treaty between Kuwait and Saudi Arabia. In the 1970s, the two Gulf Arab neighbours agreed to divide the area and incorporate each half into their respective territory while still sharing and jointly managing the zone’s petroleum wealth.

The region contains two main oil fields: the onshore Wafra and offshore Khafji.

Khafji was shut down in 2014 after a spat between the neighbours. The disagreement escalated over the Wafra field, when Saudi Arabia extended the original 60-year concession of the field, giving US-based Chevron, through its subsidiary Saudi Arabian Chevron, rights there until 2039. Kuwait was unhappy over the announcement and claims the Kingdom never consulted it about the extension.

Chevron, which operates Wafra with Kuwait Gulf Oil Company, said in December 2019 that it expected full production there to be restored within 12 months.


RELATED STORIES: OPEC Chevron Saudi Arabian Chevron Kuwait Gulf Oil Company Wafra Khafji


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