Construction work is proceeding without interruption on the $200m Wafra Main Gathering Centre Upgrade project in the neutral zone shared by Kuwait and Saudi Arabia, amid an ongoing political dispute between the two countries that has seen staff working for US oil company Chevron denied work permits and asked to leave their Mena al-Zour offices.

The neutral zone upstream operator, Kuwait Gulf Oil Company (KGOC) contracted South Korea’s SK Engineering & Construction to carry out the upgrade of the gathering centre in March 2013 and the project is slated to see completion in December 2014.

“Work is proceeding as usual,” said a person with knowledge of SK Engineering & Construction’s operations.

“It is quite possible that the project will see disruption in the future if the dispute between Saudi Arabia and Kuwait escalates – but at the moment the project is going ahead as planned and progress has been good.”

The Main Gathering Centre is located at Wafra, and has sub-centres in the South Umm Gudair and South Fuwaris fields.

The gathering centre upgrade project includes:

  • Replacement of heaters, coolers, pumps and other equipment
  • Pad lines / Transfer lines
  • Overhead power supply lines
  • Remotely operated hydraulic choke valves
  • Wet gas meters
  • High integrity pressure protection systems
  • Pig launcher and receivers
  • Instrument equipment shelter
  • Flare system

The heightened concerns about possible disruptions to operations in the neutral zone come after the Al-Khafji offshore fields in the neutral zone were shut down on 16 October.

Insiders say the shutdown and the denial of work permits to Chevron staff are tit-for-tat responses in an escalating political row, but Kuwaiti officials have denied that the Al-Khafji shutdown is due to political reasons.

“The stoppage of production at Al-Khafji in the divided zone with Saudi Arabia was for purely technical reasons and not political,” Khaled al-Jarallah, Kuwait’s foreign ministry undersecretary, told state news agency Kuna.

The emir of Kuwait, Sheikh Sabah al-Ahmad al-Jaber al-Sabah, held talks with Saudi Arabia’s King Abdullah bin Abdulaziz al-Saud on 28 October, but there are no signs as yet that tensions are cooling.

Kuwait is continuing to deny work permits to Chevron staff in Saudi Arabia.

Chevron has warned that Kuwait’s actions could reduce output from the Wafra field and even completely halt production.

The spat has also fuelled speculation that there could be delays to the ongoing $5bn oil field development project on the Wafra site.