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Riyadh, Kuwait Uphold Cut Agreement as Production Restarts in Neutral Zone | ASHARQ AL-AWSAT English Archive 2005 -2017
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The Neutral Zone’s oil fields have been closed [Getty]


Khobar- Oil drilling and production in Saudi-Kuwait common wells might be resumed after a two year halt. The relaunch of production, however, will not affect the cut agreement reached by OPEC members last week.

Bloomberg wrote that Saudi Arabia and Kuwait will cut output from their producing oil fields to allow for any increase from the Wafra and Khafji fields between the two countries, citing officials, who required anonymity because the information isn’t public yet.

The countries have yet to agree on a specific time to restart the shared fields.

Saudi Arabia produced 10.53 million barrels a day and Kuwait 2.95 million barrels a day last month, according to data compiled by Bloomberg. Both countries hold equal shares of production and reserves at Wafra and Khafji, which have a combined output capacity of more than 500,000 barrels a day.

A resumption of production from the joint oilfields would not be immediate and would be gradual, industry sources told Reuters on Sunday.

“It will take some time,” said one industry source, adding that the decision to restart the fields was likely to be made in December.

“The Saudis are telling Kuwait they can restart the Neutral Zone, so potentially another 300,000 bpd of crude [could] come on in late Q1 of 2017, or early Q2 2017. Al-Khafji Joint Operations has been told to prepare a startup readiness report,” said another industry source.

The onshore Wafra field, where Chevron Corp. operates on behalf of Saudi Arabia, closed in May 2015 because of difficulties in securing work permits and access to equipment. The offshore Khafji deposit is run by Khafji Joint Operations, a Saudi-Kuwait joint venture, and closed in October 2014 because of unspecified environmental concerns.

“We are encouraged by efforts underway by all appropriate parties to resolve the issue,” Sally Jones, a Chevron spokeswoman in London, told Bloomberg on Dec. 6. “Production will remain shut in until the situation is resolved.”

Saudi Minister of Energy Khalid A. Al-Falih visited Kuwait last November and met with his counterpart Anas Khalid Al Saleh.

Operational preparatory procedures are ongoing and await official orders to restart production, industry sources told Asharq Al-Awsat.