Much at stake in the Divided Zone

04 December 2014

Concerns increase as the land dispute between Kuwait and Saudi Arabia derails another project

The suspension of work on the Wafra gathering centre due to the ongoing land dispute between Kuwait and Saudi Arabia is a worrying development for those with a stake in Divided Zone projects.

The Wafra gathering centre upgrade is the third scheme to be disrupted by the current flare-up in tensions and has heightened concerns that more projects could see delays before the political spat is resolved.

Kuwait and Saudi Arabia have revealed very little about the exact nature of the current deterioration in relations and the key sticking points in negotiations.

Sources at construction companies operating in the Divided Zone say the latest increase in tensions has its roots in 2007, when Kuwait first unveiled plans for its Al-Zour refinery in an area that included land leased to Saudi Arabian Chevron.

Speaking off the record, in the past, Kuwaiti officials have told news outlets they believe Chevron’s offices were illegally constructed, while the US firm maintains it was granted the land legitimately in a deal with Saudi Arabia.

Much is at stake if the dispute is allowed to escalate further. This is especially true for Kuwait, which is expecting to start construction of its $14bn Al-Zour refinery next year.

Expectations are high. Kuwait and Saudi Arabia have a good track record of resolving disputes in the Divided Zone, and Kuwait will be willing to make big sacrifices to avoid delays to the refinery, one of the country’s key oil and gas projects.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.