Saudi Arabia and Kuwait Agree to Resume Oil Production from Neutral Zone Fields

Saudi Arabia and Kuwait will resume joint production at two oilfields from a shared neutral zone between the countries, according to Bloomberg, ending a five-year dispute that sidelined production from the area.

The onshore Wafra and offshore Khafji fields located along the border between Saudi Arabia and Kuwait can pump about 500,000 barrels a day — more than the production of each of the three smallest members of the Organization of Petroleum Exporting Countries last month, Bloomberg reports.

Graphic via S&P Global.

Graphic via S&P Global.

The Arabian Oil Company discovered the Khafji oil field in 1960. After the discovery of oil in the area, a permanent demarcation of the neutral zone between Kuwait and Saudi Arabia was established, with Khafji formally located within Saudi Arabia. However, the agreement concluded that both states would still maintain joint rights to all natural resources within the designated neutral zone.

Kuwait and Saudi Arabia ended a five-year dispute over the border area, allowing production to resume at two jointly run fields that can pump up to 0.5% of the world’s oil supply.

According to Reuters, Chevron has begun preparations to restart production at the Wafra oilfield. The company “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,” Sally Jones, a company spokeswoman, said in a statement Thursday in response to the resumption of the Wafra field.

Saudi Energy Minister Prince Abdulaziz bin Salman told Reuters in December that new production from the oilfields would not affect the countries’ commitments under an agreement between OPEC and other producing nations including Russia, known as OPEC+, to curtail global output.