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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Saudi Arabia And Kuwait Halt Production At Giant Joint Oil Field

Saudi Arabia and Kuwait will suspend production at the Al-Khafji field, which they operate jointly, during June, Reuters reports, quoting Kuwaiti media.

Al-Khafji is one of four offshore and one onshore field located in the neutral zone between Saudi Arabia and Kuwait. Of these, just two fields—Al-Khafji and Wafra—pumped half a million barrels daily until 2015. Operational differences and a worsening in bilateral relations led to the suspension of production during that year. The worsening came as Saudi Arabia renewed Chevron’s concession for Wafra. According to the Kuwaiti side, Riyadh did that without consulting it.

Then, in 2018, the two began negotiating the restart of the fields in the partitioned area as oil priced climbed steadily and U.S. President Donald Trump called on his Gulf allies to keep a lid on them. Indeed production restarted a few months ago, just before the coronavirus crisis began shaping up as possibly the biggest oil price crusher in history.

Al-Khafji was pumping 300,000 bpd until 2015 when production in the neutral zone was suspended and plans were to ramp this up to 325,000 bpd by the end of this year. At the time when the memorandum on the restarting of the fields was signed, there was worry this production will come on top of existing one in both Saudi Arabia and Kuwait but experts noted both countries were sticking to their production quotas under the OPEC+ agreement and the neutral zone fields will not add excess oil to their totals.

At the time, Saudi Arabia was producing about 10 million bpd of crude and Kuwait was pumping some 3 million bpd. Output from the neutral zone could have added half a million bpd to their combined total had the two not cut production at other fields. Saudi Arabia also earlier this month said it would cut an additional 1 million bpd from its total output to accelerate the recovery in oil prices.

By Irina Slav for Oilprice.com

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