Saudi-Kuwait ‘border’ issue settled; production to begin

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No compensation for loss of output

THE agreement signed in Kuwait last Tuesday between Saudi Arabia and Kuwait concerning the divided zone has settled the issue forever, opening a new page of cooperation. This is detailed in the agreement, which includes a memorandum of understanding and an attachment explaining the precise locations in order to avoid any misunderstandings concerning the equal division of the land, oil and gas by 50 percent each.

The agreement allows Chevron Saudi Arabia to remain in its present location for a period of five years until they complete their relocation to the Saudi Arabia site in Khafghi. Kuwait or its representative must compensate Chevron for the cost of replacing and relocating buildings and offices.

This has been permitted, audited and approved by reliable international organizations. No compensations are to be paid for the suspension of production in the oil fields in both Khafghi and Wafra for the past five years to any party, making way for starting a new page.

Kuwait, via its representative Gulf Oil Company, will pay Chevron Saudi Arabia half of the cost of export oil facilities, as its current location is to be owned equally by both companies. The cost of facilities will be determined by international auditing houses.

The current concession agreement between Saudi Arabia and Chevron is to conclude by end of 2046. It is estimated that both countries are looking at producing and exporting more than 600,000 barrels of crude oil from Khafghi and Wafra fields in the southern part of Kuwait on an equal sharing basis. However, this export will not be possible with the current production quota in place unless both countries shut down other oil fields to cater for the new production.

The potential production of gas from Al-Durrah field is estimated to contain more than one billion square foot of gas, or more than 175,000 barrels of equivalent oil. Gas seems to be the major winner, as both parties are in need of gas. Both parties have been instructed in the signed contract to move ahead, as both are desperate for a new gas source.

Time has come to put our agreement into action and put the past behind us, as well as ensure none of the party can unilaterally stop the fl ow of oil and gas in either directions, as it happened in the past. It’s a win-win deal for both countries, and let us reap the benefits for many years to come; along with it, the potential free gas from Al-Durrah as written and instructed in the agreement.

Kamel Al-Harami Independent Oil Analyst

By Kamel Al-Harami Independent Oil Analyst
email: [email protected]

This news has been read 13647 times!

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