• The Khafji oil field has been shut since October 2014
  • The shutdown comes amid an ongoing dispute over land use in the Divided Zone
  • Kuwait is struggling to hit production targets

Kuwait has asked Saudi Arabia to resume production at the shared Khafji oil field, which was shutdown in October last year.

In a letter to Saudi Arabian Oil Minister Ali al-Naimi, Kuwait’s Oil Minister, Ali Omar, said the unilateral decision by Saudi Arabia to close the field went against prior agreements and that Saudi Arabia would be held responsible for Kuwait’s revenue losses.

In the letter he said the move “will inflict heavy losses on Kuwait, which will be borne by the Saudi government,” according to the Kuwaiti newspaper Al-Rai, which saw a leaked copy of the letter.

Production at the offshore Khafji field was more than 300,000 barrels a day (b/d) before it was shut down.

At the time, Saudi Arabia officially said it was shut down for environmental reasons. However, industry sources have told MEED the field was shut due to an ongoing dispute over land use in the Divided Zone, an area shared by the two countries.

In the first half of 2015 production at Wafra, another field in the divided zone, was also stopped.

The official reason given for the shutdown at the time was field maintenance, but industry sources say this shutdown is also due to the dispute between Kuwait and Saudi Arabia.

Kuwait is currently struggling to meet its 2020 production target of 4 million b/d.

Average production over 2014 was 3.1 million b/d.

The ongoing dispute over land use in the Divided Zone is causing concerns that other projects in the Divided Zone could also be disrupted.

On 28 July, Kuwait’s Central Tenders Committee awarded four contracts worth $11.5bn for the Al-Zour New Refinery Project, which is due to be constructed in the Divided Zone.

Kuwait is also planning to build a large liquefied natural gas (LNG) import terminal in the divided zone.

The import terminal has already been tendered and the deadline for bids is in September this year.

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