Kuwait, Saudi Ara­bia set to re­sume Khafji oil out­put

Trial pro­duc­tion of about 10,000 bar­rels per day will start around Feb. 25

The Daily Star (Lebanon) - - FRONT PAGE -

KUWAIT: Kuwait and Saudi Ara­bia have started prepa­ra­tion work to re­sume crude oil pro­duc­tion from the Al-Khafji oil field jointly op­er­ated by the two coun­tries, with ini­tial out­put ex­pected around the end of Fe­bru­ary, two in­dus­try sources said.

Kuwait and Saudi Ara­bia, both mem­bers of the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries, agreed last year to end a five-year dis­pute over the area known as the Neu­tral Zone, al­low­ing pro­duc­tion to re­sume at two jointly run fields that can pump up to 0.5 per­cent of the world’s oil sup­ply.

Trial pro­duc­tion of about 10,000 bar­rels per day from Khafji will start around Feb. 25, a Kuwaiti oil of­fi­cial told Reuters on con­di­tion of anonymity, adding that this would be “suf­fi­cient to test all in­stal­la­tions and their op­er­a­tional ef­fi­ciency.”

The field should be pump­ing about 60,000 bpd by Au­gust, the of­fi­cial said.

An­other 10,000 bpd of trial out­put from the Wafra field will start by late March, the of­fi­cial said, adding that pro­duc­tion is ex­pected to in­crease to 80,000 bpd from the field within six months of start­ing trial pro­duc­tion.

Out­put is ex­pected to reach 175,000 bpd from Al-Khafji and 145,000 bpd from Wafra af­ter a year of restart­ing the fields, the of­fi­cial said.

Kuwaiti news­pa­per Al-Rai re­ported Sun­day that pro­duc­tion at AlKhafji will start by the end of Fe­bru­ary and that test­ing of oil and gas pipe­lines and fa­cil­i­ties has be­gun.

Khafji is op­er­ated by Al-Khafji Joint Op­er­a­tions Co., a joint ven­ture be­tween Kuwait Gulf Oil Com­pany and AGOC, a sub­sidiary of state oil gi­ant Saudi Aramco. It had been pro­duc­ing be­tween 280,000 bpd and 300,000 bpd of Ara­bian Heavy crude be­fore its clo­sure in 2014 for en­vi­ron­men­tal rea­sons.

Wafra has been shut since May 2015 and had out­put ca­pac­ity of about 220,000 bpd. U.S. oil ma­jor Chevron op­er­ates the field on be­half of the Saudi gov­ern­ment.

Saudi Ara­bia and Kuwait have been re­duc­ing oil sup­ply as part of an agree­ment be­tween OPEC, Rus­sia and other pro­duc­ers, a group known as OPEC+. That deal ex­pires in March.

Saudi En­ergy Min­is­ter Prince Ab­du­laziz bin Sal­man told Reuters in De­cem­ber that re­sum­ing pro­duc­tion from the oil­fields would not af­fect the coun­tries’ com­mit­ments un­der the OPEC+ agree­ment.

Pro­duc­tion would be grad­ual and any in­crease from the zone will be com­pen­sated for by a cut from other fields, in­dus­try sources had told Reuters.

An em­ployee in a branded hel­met is pic­tured at a Saudi Aramco oil fa­cil­ity in Abqaiq, Saudi Ara­bia.

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