Kuwaiti, Saudi officials discuss resuming Neutral Zone oil production

OPEC members Saudi Arabia and Kuwait have discussed resuming oil production in jointly operated fields in the Saudi–Kuwaiti Neutral Zone, Kuwaiti state news agency KUNA said on Wednesday.

Saudi Arabia’s minister of state for energy affairs visited Kuwait to “continue to discuss and cooperate on the resumption of oil production in the southern [Neutral Zone] after settling all required technical issues from both sides,” KUNA said, quoting a Kuwaiti government spokesman.

The Saudi–Kuwaiti Neutral Zone, or Divided Zone, is an area of 5,770 square km between the two countries’ borders that was left undefined when the border was established in 1922.

The two countries halted output from the jointly run oilfields – Khafji and Wafra – more than four years ago, cutting some 500,000 barrels per day or 0.5 per cent of global oil supply.

In February, Saudi energy minister Khalid al-Falih said the country expected to reach an agreement this year to resume oil output from the Neutral Zone.

Washington has been pressing its top Gulf ally Riyadh to reduce crude prices by increasing production.

Neutral Zone oil output is divided equally between Saudi Arabia and Kuwait.

The Wafra field is operated by state-run Kuwait Gulf Oil Co and Chevron on behalf of Saudi Arabia. The Khafji field is operated by state oil giant Saudi Aramco and Kuwait Gulf Oil.

Tensions have been simmering since the last decade, when Kuwait was angered by a Saudi decision to prolong Chevron’s Wafra concession until 2039 without consulting Kuwait.