Saudi-Kuwaiti Talks on Shared Oil Stall Over Chevron

(Bloomberg) -- Talks between Saudi Arabia and Kuwait to restart two oil fields in a neutral zone between the countries have stalled again, this time over the role of Chevron Corp., according to people familiar with the matter.

Energy ministers from both nations met in Kuwait on Sunday, seeking a resolution over Khafji and Wafra, which were halted in 2014 and 2015, respectively. Among the unresolved issues is Kuwait’s insistence that Chevron no longer operate at Wafra, the people said, asking not to be identified discussing private matters.

The importance of the fields, which can pump a combined 500,000 barrels a day, is increasing as spare production capacity dwindles elsewhere. U.S. sanctions on Iran are constricting global oil supplies at a time when prices are already close to their highest in about four years.

Chevron, through its subsidiary Saudi Arabian Chevron Inc., is still committed to the neutral zone and is ensuring that production can resume once a decision is taken, said Sally Jones, a spokeswoman.

Wafra lies in Kuwait’s section of the neutral zone, and Saudi Arabian Chevron manages Saudi Arabia’s 50 percent share in the concession under an agreement that expires in 2039. Chevron is the only international company with a concession in either country.

Kuwait has no law allowing international companies to hold oil concessions, and Saudi Arabia stopped offering production rights after it nationalized the precursor to Saudi Aramco in 1980.

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