Page 4 - MEOG Week 05 2022

MEOG COMMENTARY MEOG

Kuwait, Saudi discuss PNZ

strategy amid output uptick

Amid oil price and operational stability, production in the Partitioned Neutral Zone

is on the rise and there are signs that former output levels may soon be in sight.

KUWAIT/SAUDI A group of officials from Kuwait and Saudi guarded, the mention of completing ‘strategic’
Arabia met this week to hold talks about the projects when combined with recent increases
future development of oil projects in the shared in oil production alludes to the possibility that
WHAT: 5,700-square km Partitioned Neutral Zone the parties are working to reach former levels
The neighbours have (PNZ). and perhaps expand.
been increasing output, The meeting follows a recent gas export deal
overcoming previous for the area and a pronounced uptick in oil out- Production levels
operational issues, put, which has been slowly rising since an almost Oil production from the PNZ is reported to have
and have carried out five-year hiatus. run at an average of around 180,000-190,000
technical work to support Both countries are working to increase their barrels per day during 2021, though November
higher production. own domestic oil production capacities – though and December flows were in excess of 250,000
from very different starting points – and the bpd.
WHY: development of the shared area aligns with this In a March earnings call Aramco President
Higher oil prices and broader upward trajectory. and CEO Amin Nasser said that production was
a loosening of OPEC+ around 50,000-60,000 bpd, though he did not
production restraint has Discussion say whether this was combined or net to Saudi
seen output grow over the The Permanent Joint Committee, comprised of Arabia, noting only that output was “ramping up
past year. officials from the Kuwaiti Ministry of Oil (MoO) over time”.
and the Saudi Ministry of Energy, met in the In August, Saudi Energy Minister Prince
WHAT NEXT: PNZ on January 31, examining any issues that Abdulaziz bin Salman said the Kingdom’s share
With PNZ production may slow or the hinder the completion of “strate- of PNZ output was 135,000 bpd, suggesting a
an important part of gic” projects at the Al-Khafji and Wafra oilfields. total production of 270,000 bpd, though this fig-
Kuwait’s oil expansion On its website, the MoO reported that the ure was never clarified.
plans, it is likely to push committee had “reviewed the reports of petro- Vague plans for output expansion were laid
for further development. leum operations in the land divided zone and out by Kuwait Petroleum Corp. (KPC) CEO
the submerged divided zone adjacent to it […] Hashem Hashem in October when he said
and the use of advanced modern technologies in the firm’s upstream subsidiary Kuwait Oil Co.
petroleum operations”. (KOC) could increase its share of PNZ capacity
While the MoO’s statement was typically to around 350,000 bpd by 2025, implying a total

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