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Crude production in Saudi-Kuwait shared Neutral Zone could restart by Jan: Kuwaiti oil minister

  • Author
  • Staff reports
  • Editor
  • Maurice Geller
  • Commodity
  • Oil

Algiers — Crude production in the Partitioned Neutral Zone shared by Saudi Arabia and Kuwait could restart as soon as January, eventually adding up to 400,000 b/d in supplies at full ramp-up, Kuwaiti oil minister Bakheet al-Rashidi said Sunday.

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The two countries were working to resolve "technical issues related to the environment," he said, in order to restart production from two fields that have been offline for almost four years due to a political dispute.

"We are hoping by the end of this year, we complete the right solution and we might resume production next year," Rashidi told reporters just before an OPEC/non-OPEC monitoring committee meeting in Algiers. "I think within three to six months we will be able to resume this production."

Saudi energy minister Khalid al-Falih, however, was more circumspect and did not provide any timeline, though he said the fields in question have a total capacity of 500,000 b/d.

"We are talking to them," Falih said. "Inshallah, we hope we will resolve it in the very near future."

Crude output in the Neutral Zone fields is shared equally between the two countries.

The Khafji field is part of the Al-Khafji Joint Operations, owned 50:50 by Saudi Arabia's Aramco Gulf Operations Co. and Kuwait Gulf Oil Co.

Aramco, the field's operator, unilaterally shut production down in October 2014, citing new government emissions standards for gas flaring.

Japan's Toyo Engineering earlier this month said it had been retained to begin preparations for a restart of Khafji in early 2019.

The Wafra field is operated by KGOC and Saudi Arabian Chevron, and was shuttered in May 2015, with Chevron saying it had encountered difficulties in securing work and equipment permits.

Sources have said the dispute involved a land-use issue at Wafra unrelated to oil production.

Since the field closures, ties between the two countries have been strained somewhat over Kuwait's attempt to mediate an ongoing diplomatic row involving Saudi Arabia and Gulf neighbor Qatar.

With OPEC agreeing with Russia and other allies in late June to a 1 million b/d output boost, the Neutral Zone fields could play a vital role in supplying barrels to the market that could be tightened by US sanctions on Iran that snap back November 5, as well as Venezuela's continued output decline due to economic crisis.

--Staff reports, newsdesk@spglobal.com

--Edited by Maurice Geller, maurice.geller@spglobal.com