US oil company Chevron has seen output from Wafra, an oil field shared between Saudi Arabia and Kuwait, drop by 20 per cent since October amid an ongoing land dispute between the two countries.

Chevron operates Saudi Arabia’s 50 per cent share of the Wafra field, which is located between Kuwait and Saudi Arabia in the so-called Divided Zone.

Daily output has dropped to 180,000 barrels from 225,000 barrels in October, according to the US news agency Bloomberg, which cited anonymous sources.

Two rigs have stopped work and more may be idled in the next few months due to problems gaining work permits from Kuwait authorities, according to the sources.

The current Divided Zone land dispute dates back to 2007, when Kuwait outlined plans to build its $14bn Al-Zour refinery on land that included a site that was under lease by Saudi Arabian Chevron.

The dispute flared again in 2009 when Saudi Arabia renewed Chevron’s Divided Zone concession and Kuwaiti sources complained to the media that there had not been proper consultation with the Kuwait government.

In late October 2014, Kuwaiti officials told the Wall Street Journal that Saudi Chevron had been ordered to move out of its offices in the divided zone because of the dispute, and said Kuwait had stopped issuing work permits for Chevron staff.

In October Chevron warned Kuwait’s oil ministry that failure to resolve to resolve the dispute could lead to production ceasing at Wafra.

In November 2014 Divided Zone upstream operator Kuwait Gulf Oil Company (KGOC) issued the Korean engineering, procurement, and construction (EPC) contractor, SK Engineering and Construction (SKEC) with a suspension notice – ordering it to stop work on the $200m Wafra Main Gathering Centre Upgrade project.

According to a senior figure connected to the project who asked to remain anonymous, the suspension was due to the ongoing Divided Zone land dispute.

Insiders also claim the unexpected shutdown of the Al-Khafji offshore fields on 16 October is a result of the rising tensions, though this was denied by Kuwait’s Foreign Ministry Undersecretary Khaled al-Jarallah, in a statement on 26 October.