The two fields could reach their full capacity by the end of 2020/Bloomberg
by BloombergKuwait and Saudi Arabia will resume oil production from their shared fields this month, more than five years after a dispute halted supply.
Hashem Hashem, Chief Executive Officer of Kuwait Petroleum Corporation, said that the Khafji field will start output by the end of February 2020, while operations will resume at Wafra this week with exports likely flowing within three months.
The restart comes at a critical time as the projects will bring additional production capacity to an oil market that is already dealing with excess supply as the deadly coronavirus hits demand.
The onshore Wafra and offshore Khafji are also important because the US sanctions on Iran and Venezuela have tightened the supply of heavy, high-sulphur crude, precisely the kind of oil that the fields produce.
US diplomats had been pressing both sides to reach an agreement. But Saudi Arabia and Kuwait, both important Organisation of Petroleum Exporting Countries (OPEC) members, have said they are unlikely to add significant amounts of crude within the duration of the group’s current deal to curb output, which runs until the end of March 2020.
Saudi Arabia and Kuwait reached an agreement in December 2019 to resume output from the neutral zone—a relic of the time when European powers drew implausible ruler-straight borders across the Middle East.
Khafji was shut down in 2014 after a spat between the countries. The disagreement escalated over to the Wafra field, when Saudi Arabia extended the project’s original 60-year concession, giving a unit of US-based Chevron rights there until 2039.
Sally Jones, Saudi Arabian Chevron Spokeswoman, said that Chevron has now embarked on a series of pre-start up activity, which includes efforts to ensure its workforce is ready to safely restart operations and then production.
The neutral zone—spanning more than 5,700 km—was created by a 1922 treaty between Kuwait and the Saudi Arabia. In the 1970s, the two Gulf Arab monarchies agreed to divide the area and incorporate each half into their respective territory while still sharing and jointly managing the zone’s petroleum wealth.
MOST READ
INVESTMENT
India seizes Yes Bank, limits withdrawalsINVESTMENT
ING Groep plans to sell its Turkish unitINVESTMENT
SABB seeks to boost corporate lendingINVESTMENT
UBS launches new private client programINVESTMENT
Egypt plans to resume IPOs of parastatalsINVESTMENT
HSBC considering exiting from TurkeyINVESTMENT
Abu Dhabi’s Group 42 acquires BayanatINVESTMENT
Amanat considers stake in VPS HealthcareINVESTMENT
KIZAD, ECI partner to support UAE businessesINVESTMENT
Fiat Chrysler, PSA explore a potential mergerINVESTMENT
UBS investment bank job cuts reach EuropeINVESTMENT
Saudi Aramco plans to complete IPO this yearINVESTMENT
Emirates NBD’s launch of E20. credit positive
CPI Financial was established in Dubai in 1999 to meet the needs of an ever-expanding financial community, offering a comprehensive portfolio of market-leading products and services tailor-made for the banking and financial services sectors.
Loading More post
