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Saudis, Kuwait agree to restart Wafra field after 4 years

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Four years after halting output at the Wafra field due to disputes, Saudi Arabia and Kuwait will resume production at the field on Sunday.

A memorandum sighted by Bloomberg News contains the announcement. The Wafra field has been shut since May 2015, due to a dispute over Saudi Arabia’s renewal of Chevron Corp.’s concession there.

Restarting of production at the field would be unlikely to add significant amounts of oil to the market within the duration of the Organization of Petroleum Exporting Countries’ production cuts deal, which runs until the end of March, the two countries have said.

With regards to Chevron, Sally Jones, a company spokeswoman of its subsidiary, Saudi Arabian Chevron Inc, said in a statement, “It has now embarked on a series of pre-startup activity, which includes efforts to ensure its workforce is ready to safely restart operations and then production,”

An agreement was reached by the two countries in December to resume production at the so-called Neutral Zone. The barren strip of desert straddling Saudi Arabia and Kuwait — a relic of the time when European powers drew implausible ruler-straight borders across the Middle East — can pump about 500,000 barrels a day — more than each of OPEC’s three smallest members pumped last month.

According to findings, Khafji was shut down in 2014 after a spat between the neighbors. The disagreement escalated over the Wafra field, when Saudi Arabia extended the original 60-year concession of the field, giving California-based Chevron, through Saudi Arabian Chevron Inc., rights there until 2039. Kuwait was furious over the announcement and claims Riyadh never consulted it about the extension.

Saudi Arabia and Kuwait have held a number of private meetings since 2015, at one point coming close to signing an agreement before pulling back at the last minute over wording in the final documents regarding contentious sovereignty issues. They entered a fresh phase of talks last year.

Source World Oil
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