A unit of Chevron Corp. operating along the Saudi-Kuwaiti border
confirmed it’s shutting down the Wafra oil fields for maintenance amid a
shortage of staff and equipment, trimming a potential 250,000 barrels a
day from global supply. Saudi Arabian Chevron holds a concession to Saudi Arabia’s 50 percent stake in oil and natural gas deposits in an area called the neutral or partitioned zone, Sally Jones, a London-based Chevron spokeswoman, said late Monday in an e-mailed statement.
The Wafra fields lie in Kuwait’s section of the shared zone.
“Current difficulties in securing work permits and materials have impacted the company’s operations,” according to the statement Jones made in response to a Bloomberg request for comment. “While efforts continue with all appropriate parties to resolve the issue, Saudi Arabian Chevron and Kuwait Gulf Oil Company are jointly undertaking maintenance shut down at the onshore Partitioned Zone.”
The stoppage at Wafra may help reduce a worldwide glut that has pushed crude prices down by about 40 percent in the last 12 months. OPEC, which counts Kuwait and Saudi Arabia as members, chose in November to keep pumping crude oil to protect its share of the market rather than cutting output to boost prices. Brent crude, a global benchmark, was trading at $65.08 a barrel Tuesday at 8:42 a.m. in London.
OPEC Output
The Organization of Petroleum Exporting Countries has an official output target of 30 million barrels a day. It pumped 31.3 million barrels a day last month, data compiled by Bloomberg show. The group’s 12 member states plan to meet June 5 in Vienna to assess the market.
“A decision been taken today to stop production in Wafra joint operation for two weeks for planned maintenance,” Fadghoush Shabib Al-Ajmi, head of the labor union representing workers at state-run Kuwait Gulf Oil Co., Saudi Chevron’s partner at Wafra, said Monday on his Twitter account.
Operations at the Wafra fields will be shut for maintenance until May 26 and probably won’t restart due to lingering difficulties, two people with knowledge of the matter said on Monday, asking not to be identified because the information was confidential.
The fields have a capacity of about 250,000 barrels a day and were producing 180,000 barrels in February, two other people with knowledge of the matter said on April 22. Kuwait’s government stopped issuing or renewing permits for workers at Wafra last year, these people said.
Saudi Arabia halted operations in October at the Khafji offshore fields in the same neutral zone, citing unspecified environmental concerns. Khafji also has a production capacity of about 250,000 barrels a day.
The Wafra project, in which Chevron had planned to invest as much as $40 billion, frees heavy oil by injecting steam underground. Chevron is the only international company with a concession to produce oil in Saudi Arabia or Kuwait, according to Robin Mills of Dubai-based consultants Manaar Energy.
Kuwait has no law to allow international companies to hold oil concessions, and Saudi Arabia stopped offering production rights for oil after it nationalized the Saudi Arabian Oil Co. in 1980.
Source: www.bloomberg.com