Page 5 - MEOG Week 33 2021
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MEOG COMMENTARY MEOG
of work on those to make sure the production is sustainable from Wafra and Khafji. They are doing the right foundations and bases for pro- duction, as well as infrastructure tie-ins, and investment plans being thrown around between Aramco and KGOC and Chevron. There is a three-waydanceonpaperthatisverygood.”
According to Saudi energy minister Prince Abdulaziz bin Salman, the Kingdom’s share of PNZ output is currently 135,000 bpd, suggesting that total production is 270,000 bpd.
During a press briefing following last week’s OPEC+ summit he said: “Everything is going smoothly there with our friends in Kuwait.”
This is significantly more than the 50,000- 60,000 bpd quoted by Aramco President and CEO Amin Nasser in the company’s March 22 earnings call when he said output was “ramping up over time”.
The prince met with Kuwaiti oil minister Mohammed al-Fares last month to review “the signed agreements between both countries and a memo of understanding of resuming joint oil production along the border”, according to Kuwait’s Ministry of Oil.
Meanwhile, S&P Global Platts quoted independent Kuwait-based oil analyst Kamal al-Harami as saying that the suppressed rate of production “is due to the OPEC quotas”. He added: “If the OPEC agreement wasn’t in place, itcouldproduceintheregionof500,000bpd.”
However, in January last year, then-Kuwaiti oil minister Khaled al-Fadhel said that output from the PNZ would not have an impact on Kuwait’s compliance with the ongoing OPEC+ production cuts and PNZ output is not included in Saudi Arabia’s maximum sustainable capacity (MSC).
It is worth noting though, that the Kingdom does include in MSC 100% of output from the 150,000-bpd Abu Sa’fah field which it shares with Bahrain. This differentiation pertains to the apportioning of rights to the PNZ to AGOC while Abu Sa’fah is operated by the parent.
Meanwhile, Harami said that work has been ongoing to prepare for the development of the Dorra gas field in the offshore PNZ. Preparatory work on the field, which holds 280-310bn cubic
metres of gas and roughly 300mn barrels of oil, is nearly complete, he said. Development of Dorra has been stalled since 2013.
Chevron case
Also last week, the US Court of Appeals for the Ninth Circuit denied a petition on behalf of Saudi citizens to enforce a judgement against Chevron that could have seen the American firm pay out nearly $18bn.
The Law360 outlet quoted court notes which said that the heirs of Saudi official Khalid Abu Al-Waleed Al-Hood Al-Qarqani, who was deeded the land by the Saudi government, had been seeking $17.9bn in historic royalties since a lease was awarded to Chevron’s predecessor Standard Oil in 1949.
They had opened an arbitration case against Chevron in 2014, with the International Arbitra- tion Panel in Cairo in 2015 awarding the heirs the $17.9bn sum. The latest appeal follows denial of the claim by a California district court in 2019.
Law360 reported: “According to five of Al-Qarqani’s heirs, the transfer of ownership rights carried with it the right to enforce an arbi- tration clause in a separate concession agree- ment signed by Saudi Arabia and Standard Oil in 1933.”
It added: “A three-judge panel upheld a district court’s finding that the heirs trying to enforceanEgyptiantribunalawardwerenever a party to a concession agreement signed by the government of Saudi Arabia, nor could they apply an arbitration clause in the agreement to a separate deed transfer that occurred 16 years later.”
The panel concluded: “Chevron’s rights and obligations under the 1933 agreement were extinguished long ago” when Standard Oil sur- rendered ownership to Aramco.
The panel said that “by the time Al-Qarqani obtained any interest in the lands, Standard Oil of California had assigned its rights and obli- gations to California Arabian Standard Oil Co. (which later became Aramco) and relinquished control of Aramco.” This meant that Chevron was neither a party to the 1949 lease nor was it in control of Aramco when the deal was signed.
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