Kuwait requests arbitration in oil dispute with Saudi Arabia

Friday 08/05/2015
Production will not resume until dispute is resolved

KUWAIT CITY - Kuwait has requested arbitration in a dispute with Saudi Arabia over shared oil production from the neutral zone between the Gulf neighbours which has completely halted, a newspaper reported Tuesday.

Kuwaiti daily Al-Jarida said that talks between the two governments on output from the 5,000 square kilometre (1,930 square mile) zone that they exploit jointly under a half-century-old treaty had reached deadlock.

It said that Kuwait has now requested international arbitration but that the terms of the treaty stipulate that can only happen with Saudi Arabia's agreement.

The dispute has seen production from the zone completely halted in a blow to Kuwait, which, unlike its much larger neighbour, has little spare output capacity to compensate.

The emirate had received half of the more than 500,000 barrels per day output from the Khafji and Wafra oilfields before it stopped.

The offshore Khafji field was shut in October because of environmental concerns.

The Wafra field closed on Monday for two-week maintenance but industry sources said production would not resume until the dispute between the Gulf neighbours is resolved.

Industry sources say Kuwaiti authorities were unhappy with Saudi Arabia for renewing an agreement with Saudi Arabian Chevron for 30 years in 2009 without consulting them.

In response, it has stopped issuing or renewing visas for Chevron employees.

The halt to output come amid a worldwide supply glut that has driven down crude prices.