Page 8 - MEOG Week 01

MEOG Commentary MEOG
cited him saying there were companies “that havetheabilitytostarttheseprojects.”
The Neutral Zone – sometimes also called the Divided Zone – covers some 5,770 square km and its shared history dates back nearly 100 years. It covers a block of land running south from Kuwait along the Gulf coast. Under the Uqair Convention of 1922 sovereignty of the area was shared between the two countries.
With the discovery of oil in Kuwait and the Eastern Province of Saudi Arabia in the late 1930s, territory became a more valuable commodity and exploration concessions were granted to international oil companies in the zone in the following decade. By the mid-1960s, Kuwait and Saudi Arabia had agreed to partition the zone, setting a more definite border which took effect in December 1969.
Contention
However, there have been tensions between the neighbouring countries in the years since then. Production at Al-Khafji was halted in 2014 and the following year the onshore Wafra field suf- fered the same fate.
Together these two fields produced around
500,000 bpd, or around 0.5% of global oil supply. Thereasonfortheirshutdownwasneverentirely clear. Saudi Arabia had cited some unspecified environmental concerns, but the issue may have been wrapped up in other disputes, such as the location of a new Kuwaiti refinery in its part of the zone.
There have been previous attempts to resolve the differences and restart production, but despite some optimistic statements from some officials they did not result in any oil being pumped.
In September the CEO of Chevron said that the company could resume output from Saudi Arabia and Kuwait’s Partitioned Neutral Zone (PNZ) “relatively quickly”. Mike Wirth made the comments in the wake of the attack on Saudi oil infrastructure that cut the country’s oil pro- duction by around 5.7mn barrels per day (bpd), suggesting that the move would help offset the loss of output. Chevron controversially operates Saudi’s share of the Wafra oilfield in the PNZ, making it the only foreign oil company granted such upstream rights by either government. The new accord gives Chevron the green light to pick up from where it left off at Wafra.™
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w w w. N E W S B A S E . c o m Week 01 08•January•2019