Saudi Arabia and Kuwait pump out oil in no-mans-land

Gulf allies Saudi Arabia and Kuwait are expected to reach an agreement this month to re-open oil fields in disputed neutral zone territory.

MENA

2 min read

The New Arab

05 December, 2016

The Neutral Zone's oil fields have been closed for months following wrangling [Getty]

Oil production in a piece of land jointly controlled by Saudi Arabia and Kuwait is expected to resume following an anticipated agreement between the two nations this month, an industry source told Reuters Sunday.

Oil fields in the disputed neutral zone - where fields have been closed for months - are the only ones in the two nations where foreign investors are allowed to have equity.

"It will take some time," an industry source told the London-based agency.

"The Saudis are telling Kuwait they can restart the neutral zone, so potentially another 300,000 bpd [barrels per day] of crude come on in late Q1 of 2017, or early Q2 2017. Al-Khafji Joint Operations has been told to prepare a start up readiness report," another source said.

Khafji - one of the oil fields in the zone - was closed in October 2014 due to environmental concerns, while the Wafta field encountered operating difficulties and was shut in May 2015.

Until their closures, the two oil fields were producing a combined amount of around 500,000 bpd.

With OPEC having agreed last week to reduce oil output by 1.2 million bpd beginning next year, the reports of the agreement come at a sensitive time for the oil market which has suffered from oversupply.

According to the sources, the resumption of production would be done gradually.

The oil field closures have hit Kuwait harder than their richer ally, with the Saudis boasting a production capability four times that of their Persian Gulf neighbour.