03 Feb 2020; MEMO: Saudi Arabia and Kuwaiti yesterday started preparing for the resumption of production from the Khafji oilfield jointly operated by the two countries.
Kuwait’s Al-Rai quoted local sources as saying that the field’s administration had begun testing oil and gas pipelines and facilities,” adding that the field’s initial output was expected by the “end of February.”
Another official source told Reuters that a “trial production of about 10,000 barrels per day (bpd) from Khafji would start around 25 February,” noting that the output would be “sufficient to test all installations and their operational efficiency.”
“The field should be pumping about 60,000 bpd by August,” the official added.
Kuwait and Saudi Arabia agreed in December to end a five-year dispute over the area known as the Neutral Zone, which includes Al-Khafji and Wafra oilfields, allowing production to resume at the two jointly-run fields. The fields were said to pump up to 0.5 per cent of the world’s oil supply.
Another 10,000 bpd of trial output from the Wafra field will start by late March, the official source pointed out, explaining that the field production was expected to increase to “80,000 bpd from within six months of the trial period.”
“Output is expected to reach 175,000 bpd from Al-Khafji and 145,000 bpd from Wafra after a year of restarting the fields,” the source noted.
Khafji is operated by Al-Khafji Joint Operations Company, a joint venture between Kuwait Gulf Oil Company and Aramco Gulf Operations Company (AGOC) – a subsidiary of state oil giant Saudi Aramco. It had been producing between 280,000 bpd and 300,000 bpd of Arabian Heavy crude before its closure in 2014 for environmental reasons.
On the other hand, Wafra – operate by the United States (US)’s Chevron on behalf of the Saudi government – has been shut since May 2015 and had an output capacity of about 220,000 bpd.
The two countries – both members of the Organisation of the Petroleum Exporting Countries (OPEC) – shut the Khafji field in October 2014 for environmental reasons, while Wafra was shut later in May 2015.
Saudi Arabia and Kuwait have been reducing oil supply as part of an agreement between OPEC, Russia and other producers.
