Saudi Arabia, Kuwait Mull Resuming Production From Neutral Zone Fields

Saudi Arabia and Kuwait are discussing the potential restart of production from neutral zone fields between the two countries that were taken off world markets in 2015 due to an ongoing dispute.

The neutral zone produces more than 470,000 barrels of oil per day (Mbbl/d) from onshore and offshore fields.

The onshore Al-Wafra Field has a production capacity of about 220 Mbbl/d of Arabian heavy crude, while the offshore Al-Khafji Field produces 250 Mbbl/d.

Kuwait Oil Minister Essam al-Marzouq said early this month that both countries are in talks over the potential resumption of production, adding that maintenance work at the fields are set to start soon. This was followed by Chevron Corp.’s (NYSE: CVX) decision to appoint veteran Saudi executive Ahmad Awad al-Omar as president of its operations in Kuwait. Mohamed al-Marri will replace al-Omar as president of Saudi Arabian Chevron Inc.

Sources familiar with the talks said the two countries have agreed that any resumption of crude production from the shared oil fields won’t raise their output beyond limits set by OPEC.

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The root of the issue dates back to 2014 when Saudi Arabia decided to shut down the Al Khafji Field citing unspecified environmental issues.