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MEOG PRoJeCts & ComPanies MEOG
Chevron offers to resume PNZ production
PnZ
ThE CEO of Chevron has said that the com- pany could resume output from Saudi Arabia and Kuwait’s Partitioned Neutral Zone (PNZ) “relatively quickly” in an interview with CNBC.
Mike Wirth made the comments in the wake of the attack on Saudi oil infrastructure that cut the country’s oil production 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.
in July, Saudi’s then deputy oil minister, Prince Abdulaziz Bin Salman, visited officials in Kuwait as the neighbours resumed efforts to find a solution to their quarrel about the PNZ.
No oil has been produced from the 5,700-square km border area since the fields were shut in because of disagreements between the two governments in 2014 and then in 2015.
The Kuwait News Agency (KUNA) quoted a government spokesman as saying that the sides were working to complete “all technical issues required” before beginning discussions about resuming oil production.
Output of a combined total of around 500,000 bpd from the offshore Al-Khafji and onshore Wafra fields remains shut-in, with divisions within the Kuwaiti government said to be among the main factors preventing a restart.
Al-Khafji was shut down on Riyadh’s orders in 2014, purportedly over environmental viola- tions, depriving the equal partners of combined
output of around 250,000 bpd.
A series of contracts placed in 2018 by the
offshore area’s operating company, Khafji Joint Operations (KJO), sent signals of work intensi- fying on the ground, in presumed anticipation of an imminent restart. KJO is a joint venture of units of government-owned Kuwait Petroleum Corp. (KPC) and Saudi Aramco.
Five-year engineering services contracts were let to Canada’s SNC Lavalin in February and to Japan’s Toyo Engineering in July, the latter explic- itly linked by the contractor to a planned return to production.
On September 5, UK-based Oil Plus announced the award of a contract by KJO to carry out water-injection compatibility studies and engineering work.
The status of thornier negotiations on the onshore PNZ, and its producing Wafra field, remains unclear. The field also has a capacity of around 250,000 bpd.
Chevron shut down operations in mid-2015 on the grounds of frustration of the firm’s work by the Kuwaiti authorities, allegedly born of long-standing pique at Riyadh’s renewal of the US company’s concession in 2009.
This was compounded by a dispute that had erupted two years previously over land leased by Saudi Arabia to Chevron in the Al-Zour area, where a multi-billion dollar integrated down- stream hub is under development by KPC. Kuwait has long been particularly sensitive about the notion of foreign oil companies producing domestic resources.
Week 37 17•September•2019 w w w . N E W S B A S E . c o m P11
