Kuwait and Japan's Arabian Oil Co. (AOC) will start talks in the coming three months to hammer out an agreement on oil operations in an offshore neutral zone, the emirate's oil minister said in statements published Monday, June 18.
"The next three months will involve extensive direct negotiations in order to come up with a formula which will meet our objectives and regulations, and also meet the objectives of our partners," Adel al-Sebeih told the Middle East Economic Survey (MEES).
But the "new contract, if any, will not be based on the previous contract, since this was concession-based and the new contract will be service-contract based," the minister said.
The new contract will be "a bit wider" than a technical service agreement "with operatorship and including finance and marketing. It will be a combination of all that," Sebeih added.
Saudi Arabia and Kuwait each has a 10.9 percent stake in AOC, while the main Japanese shareholders include Tokyo Electric Power Co., Kansai Electric Power Co. and Nippon Life Insurance, and Nippon Steel Corp.
Kuwait warned Japan in March it would be "difficult" to renew a contract with AOC for drilling rights in the offshore neutral zone shared with Saudi Arabia due to expire in January 2003.
AOC lost its concession in the Saudi sector of the zone in February 2000, after Tokyo refused to fund a two-billion-dollar railway as demanded by Riyadh in return for renewing the 40-year-old concession.
Output from the oilfields in the neutral zone is 300,000 barrels per day. Saudi Arabia and Kuwait each receive 11 percent of the revenues and until it lost the concession, AOC took the rest, giving Japan about five percent of its crude oil imports. — (AFP)
© Agence France Presse
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