Kuwait has warned Japan it will be "difficult" to renew a contract with the Arabian Oil Co. (AOC) for drilling rights in an offshore neutral zone shared with Saudi Arabia, a newspaper reported Saturday.
"I informed Japan's minister of economy, trade and energy that it would be difficult for Kuwait to renew the concession agreement on the basis of the current terms," oil ministry undersecretary Issa al-Oun told Al-Anba newspaper.
Oun made the statement on his return from a visit to Tokyo where he represented the Gulf state in an AOC board of directors meeting.
Japan has lost its concession in the Saudi sector of the zone that ran out 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.
AOC still represents Kuwait's interest in the neutral zone under a separate contract which expires in January 2003, although the loss of the Saudi rights halved its assets and annual revenues.
Output from the Khafji and Hut fields in the neutral zone is 300,000 barrels per day. Saudi Arabia and Kuwait each receive 11 percent of revenues and AOC the rest, providing Japan with about five percent of its crude oil imports.
Oun said Kuwait was studying a number of "options to select the best terms" in line with latest advances in drilling technology. Japan depends on imports for its crude oil needs and nearly 90 percent of the supplies come from the Middle East, with the United Arab Emirates as its top provider.
AOC has agreed with Saudi Arabia's state-run ARAMCO Gulf Operations Company (AGOC) on terms to split output in the Saudi-controlled portion of the Kafji field until the Japanese firm's contract for Kuwait's sector expires.—AFP.
(c) –Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)