Saudi Aramco lauds Saudi-Kuwait oilfield agreement

Saudi Arabia and Kuwait on verge of Neutral Zone oil deal

Kuwait and Saudi Arabia could reach an agreement by the end of this year to renew oil output in the shared neutral zone along their border.

Kuwait's oil minister Khaled al-Fadhel said on Twitter that the memorandum of understanding signed with Saudi Arabia included "the resumption of production in the divided zone".

"Both sides will work to ensure production resumption at the earliest opportunity", he added.

The two fields were pumping some 500,000 barrels per day before production was halted, first at Khafji in October 2014 and then at Wafra seven months later, over a dispute between the neighbours. NY Times reports that Chevron was losing 100,000 barrels a day due to the dispute. Prince Abdulaziz said in an interview with Reuters in December that resuming production from the joint oilfields would not affect their OPEC+ commitments to reduce oil output.

The meeting comes after a series of key global events in the oil and gas field, including the meeting of parties to the United Nations Framework Convention on Climate Change, held in Madrid. Saudi Arabia and Kuwait have been reducing oil supply as part of a broader pact between OPEC and non-OPEC members aimed at supporting oil prices.

The agreement was reached after a lengthy process involving large teams of political, technical and legal representatives.

The fields are particularly important because USA sanctions on Iran and Venezuela have tightened the supply of heavy, high-sulfur crude - precisely the kind of oil that the neutral zone produces.

The slump has prompted OPEC and its allies to make deeper production cuts starting next month.

The Neutral Zone is an area of 5,770 square km along the Saudi-Kuwaiti border.

Saudi Arabia and Kuwait have held a number of private meetings since 2015, at one point coming close to signing an agreement before pulling back at the last minute over wording in the final documents regarding contentious sovereignty issues.

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