Saudi Chevron Said to Halt Oil Production at Wafra Fields

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Saudi Arabian Chevron started shutting down production today at the Wafra oil fields, removing about 250,000 barrels a day of potential supply from world markets, according to two people with knowledge of the matter.

The Chevron Corp. unit began halting operations at the fields that Saudi Arabia is developing jointly with Kuwait, according to the people, who asked not to be identified because the information is confidential. A Chevron Corp. media official had no immediate comment when asked by phone and e-mail.

Saudi Arabian Chevron faces difficulties obtaining work permits and bringing equipment to the Wafra fields, which lie in a neutral border zone controlled by both Kuwait and Saudi Arabia, Sally Jones, a spokeswoman for the company in London, wrote in an e-mail on April 21.

A halt at Wafra may help ease a global supply glut that drove benchmark prices down about 50 percent last year. OPEC, which counts Kuwait and Saudi Arabia as members, chose in November to keep pumping crude oil to protect its share of the global market rather than cutting output to boost prices. The 12-nation Organization of Petroleum Exporting Countries produced more than 31 million barrels a day last month, data compiled by Bloomberg show.

Field Shutdown

Wafra oil fields operations are shutting down for maintenance from today until May 26 and probably won’t restart due to lingering difficulties, according to the two people with knowledge of the matter.

“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 on his Twitter account.

The fields, with a capacity of about 250,000 barrels a day, 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, which are 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 from Dubai-based consultants Manaar Energy. Chevron’s concession to operate Saudi Arabia’s stake in the shared border zone runs until 2039, according to the Saudi oil ministry’s website.

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.

(Updates with oil field shutdown in first paragraph.)
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