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03 February 2020
ECONOMY

Kuwait, Saudi Arabia commences work to resume oil output from Khafji

Saudi Arabia and Kuwait have been reducing oil supply as part of an agreement between OPEC, Russia and other producers (OPEC+)

Saudi Arabia and Kuwait have been reducing oil supply as part of an agreement between OPEC/iStock

by Kudakwashe Muzoriwa

Kuwait and Saudi Arabia have commenced preparation work to resume crude oil production from the al-Khafji oilfield jointly operated by the two countries, with initial output expected around the end of February 2020.

The two Arabian Gulf neighbours, both members of the organisation of the Petroleum Exporting Countries (OPEC), agreed in 2019 to end a five-year dispute over the area known as the Neutral Zone, paving way for production to resume at two jointly run fields that can pump up to 0.5 per cent of the world’s oil supply.

Reuters reported that trial production of around 10,000 barrels per day (bpd) from Khafji will start around 25 February 2020. The trial production will be sufficient to test all installations and their operational efficiency.

The Khafji field is projected to pump around 60,000 bpd by August 2020.

Moreover, another 10,000 bpd of trial output from the Wafra field will start by late March 2020 and production is expected to increase to 80,000 bpd from the field within six months of starting trial production.

Output is expected to reach 175,000 bpd from Khafji and 145,000 bpd from Wafra after a year of restarting the fields.

The Khafji is operated by Al-Khafji Joint Operations Company, a joint venture between Kuwait Gulf Oil Company and AGOC, a subsidiary of Saudi Aramco. The field had been producing between 280,000 bpd and 300,000 bpd of Arabian Heavy crude before its closure in 2014 for environmental reasons.

Similarly, the Wafra field was closed in May 2015 and had output capacity of about 220,000 bpd. US-based Chevron operates the field on behalf of the Saudi government.

Saudi Arabia and Kuwait have been reducing oil supply as part of an agreement between OPEC, Russia and other producers (OPEC+).

OPEC is said to be considering a proposal to deepen current production curbs by about 500,000 barrels a day, though there is no consensus on the idea yet. As OPEC and its partners are already in the midst of steep production cutbacks, many analysts are sceptical on how much more they’re willing to do.


RELATED STORIES: Kuwait Saudi Arabia Neutral Zone Organisation of the Petroleum Exporting Countries Khafji

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