Japan’s biggest crude oil producer Arabian Oil Company (AOC) has signed Sunday, December 29, a long-awaited agreement with the Kuwaiti government to taping the Khafji offshore oilfield. The new technical service contract replaces a 44-year-old concession agreement, set to expire January 4, 2003.
Under the new deal, AOC is contracted to produce the oil on a commission basis, as well as initially provide technical services and help arrange $750 million soft loans to finance zone operations. In return, AOC was guaranteed a 20-year right to purchase up to 170,000 barrels of crude oil a day from the Kuwait Petroleum Corporation.
The Khafji oilfield, whose output reaches 270,000 barrels of crude oil per day, is located in the Neutral Zone, an offshore area divided between Kuwait and Saudi Arabia. In February 2000, the Tokyo-based oil producer lost concession rights to the Saudi portion and is since jointly exploring the zoned with Saudi Arabia’s Aramco Gulf Operations Company (AGOC).
Earlier this year, AOC managed to secure a "basic principles" agreement with the Kuwaiti government, allowing the Japanese company to undertake oil production on a commission basis. AOC also gained the right to buy a minimum of 100,000 barrels of crude oil a day from Kuwait over a 20-year period and to provide technical services for an initial five-year period. — (menareport.com)
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