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Kuwait aims to settle oil field disputes with Iraq, Saudi Arabia in coming weeks

London — Kuwaiti oil minister Bakheet al-Rashidi said Wednesday he expects to resolve two long-standing oil field disputes involving neighbors Iraq and Saudi in the coming weeks.

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In comments reported by Kuwaiti official news agency Kuna, Rashidi said Kuwait would soon sign an agreement with Iraq on importing gas and operating joint oil fields by the end of the year.

The oil fields straddling the border between Iraq and Kuwait were the center of contention that led to former Iraqi President Saddam Hussein invading Kuwait in 1990. Hussein had accused Kuwait of tapping crude that belonged to Iraq.

Since the war's end, the two sides have attempted to resolve lingering differences over ownership and operation of the fields.

"We are in the process of selecting a global consultant to study the joint fields project," Rashidi said, according to the Kuna report.

Meanwhile, the Neutral Zone between Saudi Arabia and Kuwait could begin production shortly, Rashidi said.

The Neutral Zone contains two fields with a combined production capacity of some 500,000 b/d, but they have been offline for almost four years due to a political dispute between the two sides.

"Matters with our brothers in Saudi Arabia are going at a steady pace, and we expect the return of production in the divided region soon," Rashidi said.

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 4, as well as Venezuela's continued output decline due to economic crisis.

S&P Global Platts reported last month that the Saudi Arabia and Kuwait were aiming for a December restart of production at the fields, with Rashidi expected to meet with Saudi counterpart Khalid al-Falih in November to discuss the issue.

The two ministers will also be attending an OPEC/non-OPEC Joint Ministerial Monitoring Committee in Algiers on September 23.

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.

--Herman Wang, herman.wang@spglobal.com

--Edited by James Leech, james.leech@spglobal.com