Neutral Zone is lesson for the Gulf

02 May 2011

It is a good example of how two Gulf countries can work together on a mutually beneficial issue

The Neutral Zone located between Saudi Arabia and Kuwait is arguably the best example of how two Gulf countries can work harmoniously on a mutually beneficial issue.

The Neutral Zone has a substantial amount of oil and gas reserves, with about 5 billion barrels of oil and a trillion cubic feet of gas.

Khafji Joint Operations (KJO) is the 50:50 joint venture of Aramco Gulf Operations Company and the Kuwait Gulf Oil Company, which is responsible for extracting the hydrocarbons from the area.

KJO has plans to increase production in the area, pushing it up to 800,000 barrels a day (b/d) of oil and to start extracting the gas for both resale and reinjection into the fields.

To achieve this, a multibillion-dollar plan has been made and international contractors are now lining up for engineering, procurement and construction (EPC) contracts that will be carried out both off and onshore.

The work will be carried out over the next three years and many contractors have identified the 50-kilometre pipeline that is part of the offshore package as the contract they want to win.

Investing in its infrastructure and increasing production is something KJO has a good reputation for doing. Its recent investment in enhanced oil recovery with the US’ Chevron, as well as a recent award to France’s Technip to carry out $400m worth of offshore work is testament to that.

 Great joint ventures usually work because the best aspects of each company are adapted and then bettered. The efficient and transparent way that KJO is run backs this argument up.

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