Saudi Arabia, Kuwait to Restart Output from Neutral Zones

Saudi Arabia, Kuwait to Restart Output from Neutral Zones

Saudi Arabia and Kuwait are expected to agree in December to resume oil production from the jointly operated oilfields in the Neutral Zone fields , mainly Khafji and Wafra, that lie between both countries, Reuters reported.

The Khafji field had been producing 280,000 to 300,000b/d until its closure in October 2014 for environmental reasons. It is operated by Al-Khafji Joint Operations, a joint venture between Kuwait Gulf Oil Company and AGOC, a subsidiary of Saudi Aramco. The Wafra field, operated by US Chevron has an output capacity of about 220,000b/d of Arabian Heavy crude. Wafra has been shut since May 2015 due to operating difficulties, informed Gulf Business.

The restart would come at a sensitive time for the oil markets after OPEC agreed last week to reduce output by around 1.2mb/d from January in a bid to reduce global oversupply and prop up prices. However, a resumption of production from the joint oilfields would not be immediate, but it will occur gradually.

The Neutral Zone is the only place in Saudi Arabia and Kuwait where foreign oil firms have equity in fields, which are otherwise owned and operated by state oil companies. Crude output is divided equally between the two countries.


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