Saudi and Kuwait shut the second oilfield in the neutral zone

Saudi Arabia and Kuwait decided to shut the second oilfield in the neutral zone, effectively halting output in the area which produced 500,000 barrels of oil, an official said Monday.

“A decision has been taken today to shut operations at Wafra oilfield… for two weeks for periodical maintenance,” head of the trade union of Kuwait Gulf Oil Co. (KGOC) Fadghoush al-Ajmi told AFP.

KGOC and Saudi Arabian Chevron jointly run the Wafra field which produced 184,000 barrels on Sunday, Ajmi said.

At one stage, the oilfield produced around 220,000 barrels per day (bpd), he said.

In October, Saudi Arabia halted production in the offshore Khafji oilfield, also in the neutral one, which produced more than 300,000 bpd.

An oil industry source told AFP that the closure in Wafra is due to a row between the two Gulf neighbours, and that periodical maintenance is a “diplomatic term” used as a cover.

“The production may not resume soon unless the two nations find a solution to their row” which began in 2009, the source told AFP, requesting anonymity.

According to industry sources, Kuwaiti authorities were unhappy with Saudi Arabia renewing an agreement with Saudi Arabian Chevron in 2009 for 30 years without consulting them.

As a result, Kuwait stopped issuing or renewing visas for Chevron employees.

The Wafra field is the largest onshore field and is in the 5,000-square-kilometre neutral zone which the Gulf neighbours exploit jointly under a nearly 50-year-old treaty.

The crude is exported through Al-Zour port, just inside Kuwait, meaning that both companies’ staff need papers from the emirate.

The production cuts come amid a worldwide supply glut that has driven down crude prices.

OPEC kingpin Saudi Arabia has spare production capacity of more than 2.0 million bpd, but Kuwait has little spare capacity to make up for lost neutral zone output.

The 500,000 bpd production from Wafra and Khafji was shared equally between the two sides.

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