Saudi Arabia and Kuwait, which share two oilfields that have not been pumping oil for five years, have authorized the restart of one of those oilfields as early as Sunday,?
Saudi Arabia and Kuwait, which share two oilfields that have not been pumping oil for five years, have authorized the restart of one of those oilfields as early as Sunday, Bloomberg News reported on Thursday, quoting an internal memo it has seen.
Saudi Arabia and Kuwait have given the go-ahead to the resumption of oil production from the Wafra oilfield, which has been out of operation since May 2015, due to a dispute between the two neighboring countries.
At the end of 2019, Saudi Arabia and Kuwait?reached an agreement?to resume oil production from the two oilfields they share in the Neutral Zone.
The so-called Partitioned Neutral Zone (PNZ) was?established?between Saudi Arabia and Kuwait in 1922 to settle a territorial dispute between the two neighboring countries. As of 2015, the oil production capacity in the neutral zone stood at a total of 600,000 bpd, equally divided between Kuwait and Saudi Arabia, according to the Energy Information Administration (EIA). Production from the zone averaged around 500,000 bpd just before the shutdown of the two oil fields, Khafji and Wafra, in 2014-2015.
Operational differences and a worsening in bilateral relations led to the suspension of production back in 2015. The worsening came as Saudi Arabia renewed Chevron's concession for Wafra. According to the Kuwaiti side, Riyadh did that without consulting it.
Related: Another Oil Major Bails On Marcellus Shale
The two neighbors now have agreed to restart the two oilfields, which could put an additional?500,000 bpd-600,000 bpd?on the oil market, at full capacity.
Last month, Kuwait said that it expects its share of the oil production from the Neutral Zone to be 250,000 bpd by the end of 2020.
Earlier this month, sources from Kuwait and Saudi Arabia told Oilprice that trial production of 10,000 bpd would begin at the Khafji field on or around February 25. ??
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Bullish Sentiment Keeps Oil Above $60
New England Natural Gas Prices Hit Two Year High
What Will The Average Oil Price Be In 2020?