Kuwait signed a "statement of principles" Tuesday, September 18, with Japan's Arabian Oil Co. (AOC) allowing the start of talks on terminating an AOC concession and reaching a service agreement.
"The statement signed today is non-binding to either side," a senior Kuwaiti oil official told AFP. "It is simply an understanding that the two sides will now negotiate to agree on a settlement. If we reach an agreement, and there is parliamentary approval, it has to be signed by the end of this year," he said.
The official explained that negotiations would involve three agreements: "Terminating concessions and the handover, a crude supply agreement, and a Japanese loan to finance Kuwaiti oil projects." He added that "part of the agreement to terminate concession and handover operations will include a technical assistance agreement for Japan."
Kuwaiti Oil Minister Adil Al-Sebih has repeatedly said that no agreement could be signed with the AOC without parliamentary approval and that any consensus must be in line with Kuwait's constitution. The AOC, Japan's largest oil producer, said last week it had agreed basic terms with the Kuwaiti government for continuing oil operations in the Kuwaiti sector of the Khafji field.
The company's existing drilling concession in an offshore zone shared by Kuwait and Saudi Arabia is due to expire in January 2003. A successful outcome to negotiations with Kuwait is crucial for AOC after it lost its 40-year-old concession for drilling in the Saudi portion of the field in February 2000.
The company currently produces 140,000 barrels of crude oil a day in the offshore neutral zone, against the total output from the oilfields of 350,000 barrels. Saudi Arabia and Kuwait each have a 10.9 percent stake in AOC, while the main Japanese shareholders include Tokyo Electric Power Co., Kansai Electric Power Co. and Nippon Steel Corp. — (AFP, Kuwait City)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
