Saudi Chevron to stop production from its Wafra field

22 April 2015

Operations are set to cease in May due to an ongoing dispute between Kuwait and Saudi Arabia

  • Operations are due to start shutting down on 9 May
  • Saudi Arabian Chevron has informed Kuwaiti authorities of its plans to withdraw from the field
  • The ongoing land dispute dates back to 2007

On 9 May, Chevron is due to start shutting down its operations at the Wafra field in the Divided Zone, which is shared by Kuwait and Saudi Arabia, due to a political spat between the two countries.

Saudi Arabian Chevron has informed Kuwaiti authorities of its plans to withdraw from the field, according to sources with knowledge of the matter.

The oil company has suffered over recent months due to problems getting work permits from the Kuwaiti authorities, according to sources.

Saudi Arabian Chevron’s activities at Wafra are the latest in a string of oil and gas operations that have been affected by the ongoing dispute between Saudi Arabia and Kuwait.

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 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.

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