Daily Management Review

Saudi Arabia And Kuwait Resolve Differences To Resume Joint Oil Production


Saudi Arabia And Kuwait Resolve Differences To Resume Joint Oil Production
The disagreement between Saudi Arabia and Kuwait over the Khafji oil field has come to an end with the Saudi energy minister announcing that the two countries would be jointly operating the oil field which would yield as much as 320,000 oil barrels per day (bpd) by the end of next year. This was reported Saudi-owned al-Arabiya TV.
This announcement was made at the Khafji oil field complex in Saudi Arabia by the kingdom’s Prince Abdulaziz bin Salman. A day before, the two countries had signed the deal that ended the dispute over the partitioned Neutral Zone which is supposed to be shared equally by the two countries.
Production of crude oil at the Khafji and Wafra field had beene stopped by the two members of the oil cartel Organization of the Petroleum Exporting Countries (OPEC) more than five years ago. There was also dispute over another oil field that the two countries used to run jointly. The two countries have also come to an agreement to restart production at the Wafra oil field. The shutdown of the two oil fields by the two countries has resulted in a shortage of about 500,000 bpd which is equivalent to about 0.5 per cent of the oil supply of the world.
"With the signing of this new accord, both parties have reached consensus that now is the right time to resume production in this zone," Saudi Aramco President and Chief Executive Amin Nasser said in a statement. He also attended the ceremony, alongside Kuwaiti Oil Minister Khaled al-Fadhel.
AGOC, a subsidiary of Aramco, and Kuwait's Gulf Oil Company, jointly operates the Khafji oil field.
The resumption of oil production jointly by the two countries from the Neutral Zone will not have any impact on the pledge both the countries in a deal that aims to cut down over all production of oil that has been reached between the OPEC and other oil producers which includes Russia. This group of oil producing countries is also known as OPEC+.
Saudi Arabia and Kuwait equally divides the total oil produced at the Neutral Zone. That area is governed by treaties that date back to the 1920s treaties which is related to sharing of borders between the two countries.