Saudi, Kuwait discuss Neutral Zone oil production

Saudi Arabian and Kuwaiti officials for the Neutral Zone -- the oil-producing area that straddles the border between the two countries -- met on July 3 to discuss ways to "develop and exploit the natural resources in the divided region," Kuwait's state-run news agency Kuna reported, citing a statement from the Kuwait oil ministry.

Discussions included boosting production from the current 170,000-175,000 b/d to 500,000 b/d, though 250,000-300,000 b/d is more likely in the next five years, a source with knowledge of the operations told S&P Global Commodity Insights.

The July 3 Neutral Zone meeting was held at the headquarters of the joint Wafra operations in Kuwait, according to Kuna. Kuwait's undersecretary of the oil ministry, Nimr Fahd al-Malik al-Sabah, who is head of the Kuwait side, attended the meeting along with the head of the Saudi side, Muhammad al-Brahim, assistant Saudi energy minister, Kuna said.

"There are operational challenges" likely to keep production from going any higher, the person said.

The fields located in the Neutral Zone lie in onshore and offshore territory shared by the two nations.

The onshore Wafra is operated by KGOC and Saudi Arabian Chevron while the offshore Al-Khajfi is operated by Saudi Arabia's Aramco Gulf Operations Co. and Kuwait Gulf Oil Co., a unit of Kuwait Petroleum Corp.