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Kuwait, Saudi Arabia to Reach Agreement on Neutral Oil Production Zone

Kuwait, Saudi Arabia to Reach Agreement on Neutral Oil Production Zone

Monday, 21 October, 2019 - 10:30
Pumpjacks are seen against the setting sun at an oil field (File Photo: Reuters)

Saudi Arabia and Kuwait are close to reaching an agreement on the divided zone including two oil fields, Khafji and Wafra, that produce about half a million barrels per day (bpd).

The two countries have reached an arrangement to resume working in the neutral zone, noted Kuwaiti reports which were not confirmed by official sources.

Kuwaiti National Assembly Speaker Marzouq al-Ghanim said Sunday that the talks between Kuwait and Saudi Arabia pending an agreement on the resumption of oil output in the divided zone is a "testament" to the camaraderie between the Gulf neighbors.

"The issue will be sorted out amicably befitting the brotherly relationship between Kuwait and Saudi Arabia," stressed Ghanim.

The Speaker thanked officials from both nations for their contributions towards resolving the matter.

Kuwait’s Deputy Foreign Minister Khaled al-Jarallah said that the talks about restarting oil production from the jointly-operated fields in the neutral zone are “very positive”.

Jarallah indicated that when the final deal about this zone is reached, the two countries will start discussing the resumption of oil production.

Earlier, Kuwaiti sources confirmed that Saudi Arabia and Kuwait reached an agreement and the issue has been resolved, pending the production resuming its normal levels.

However, the governments and national oil companies of both countries did not issue joint statements on the matter.

The sources noted that a protocol had been signed between Riyadh and Kuwait to resume production to its previous levels and expected it to restart soon after some administrative procedures in Khafji field and within three months for Wafra.

Production has been completely halted in the 5,770 zone including Khafji and Wafra fields for over 5 years.

The zone was left undefined when the border was established by the Uqair Convention of December 2, 1922.

Khafji is operated by al-Khafji Joint Operations Co, a joint venture between Kuwait Gulf Oil Company and AGOC, a subsidiary of state oil firm Saudi Aramco.

It was shut in October 2014 for environmental reasons and had been producing 280,000 to 300,000 bpd before its closure.

Wafra has been shut since May 2015 due to operating difficulties. US oil major Chevron operates the field on behalf of the Saudi government, and it has an output capacity of about 220,000 bpd of Arabian heavy crude.

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