An Amiri decree is on its way to the Kuwaiti Parliament for the approval and implementation of a memorandum of understanding (MoU) signed by the governments of Kuwait and Iraq to develop the four shared oil fields in the southern part of Iraq. These four oil fields are Al-Abedeli and Al-Ratqa on the Kuwaiti side, and Al-Rumilah and Safawan on the Iraqi side.
Undoubtedly, such cooperation in creating joint-oilfield operations will end any future oil-related disputes and will ensure better understanding and maximum benefits for both parties. The best know-how and technology can be adopted which could set examples in future-energy cooperation, of course with the participation of international oil companies for prolonging the life of the oil wells for as long as possible.
Kuwait’s long-term strategy in strengthening relations can be illustrated more in its agreement to convert the remaining balance of $4.6 billion outstanding from war compensation into long-term investment projects rather than receiving the payment in cash.
Kuwait’s intention is to use this $4.6 billion for major projects related to developing gas fields, producing electricity, and in other industries as well as for importing crude oil, petroleum products and other goods and services. We could create a joint-venture operation with Iraq and can invite private sector to participate as well. There can be no limits if the intention is good. The southern part of Iraq and the city of Basra could become major industrial areas for the whole of Iraq with the participation of Kuwait.
This has been our policy since independence – to invest in infrastructure and build schools, universities, hospitals, roads instead of paying cash, as part of the Arab and foreign assistance. We have been successful so far and will continue to be so.
In the meantime, the two parties must agree on the steps to be taken for inviting consultants to head the project and scope of works. Major oil companies that operate in shared oil and gas fields in the North Sea, in USA and other parts of the world must be invited and the best must be picked. It is important to start the joint southern-fields operations on the right path so that any major obstacles in the future can be avoided.
Finally, the formal agreement for developing the joint oilfields operations must be approved by the Parliament. It will take time, but Kuwait government is keen for its speedy conclusion, as their other mega projects to be executed in Basra include power plants and gas developments, with the participation of the private sectors of both sides.
By Kamel Al-Harami – Independent Oil Analyst