Kuwait, Saudi to raise Neutral Zone oil production

Saudi Arabia and Kuwait are continuing work to increase crude oil production at the Neutral Zone fields they share, which could be a key source of additional barrels as OPEC+ spare capacity is expected to tighten significantly in 2022.

The Neutral Zone fields, which lie in onshore and offshore territory shared by Saudi Arabia and Kuwait at their border, were offline for more than four years until 2020, due to a political dispute that was resolved with a signing of an agreement in December 2019. Production in the zone is divided evenly between the two countries.

The offshore Khajfi is operated by Saudi Arabia's Aramco Gulf Operations Co. and Kuwait Gulf Oil Co., while the onshore Wafra is operated by KGOC and Saudi Arabian Chevron.

Crude production in the Neutral Zone's onshore Wafra and offshore Khafji fields has suffered from technical challenges stemming from its lengthy shutdown, sources have told S&P Global Platts.

The output range from below 200,000 b/d some months to as high as 270,000 b/d. Prior to their shutdown in the mid-2010s, the fields typically produced a combined 500,000 b/d.

Besides the Neutral Zone, the two countries also said in their statement they would continue to support the OPEC+ alliance in "enhancing the stability of the global oil market, and stressed the importance of continuing this cooperation and the need for all participating countries to adhere to the OPEC+ agreement."