Kuwait's oil minister said Tuesday October 16 the Supreme Petroleum Council (SPC) had approved a "statement of principles" signed last month with Japan's Arabian Oil Co. (AOC) and that he expected the cabinet to discuss it later this month.
"We discussed the statement of principles, its content, and it has been approved," Adel Al-Sebeih told AFP after the SPC's meeting on Tuesday, chaired by First Deputy Premier and Foreign Minister Sheikh Sabah Al-Ahmad Al-Sabah.
"It will be recommended to the cabinet to approve it, then it will be implemented, hopefully," Sebeih said, adding that the cabinet is expected to discuss it in its October 28 session.
Kuwait signed the statement of principles with the AOC on September 18, allowing the start of talks on terminating an AOC concession and reaching a service agreement. The statement, which is non-binding, is an understanding that the two sides will begin negotiating to agree on a settlement.
"The statement of principles is to provide the mechanism of a new agreement acceptable to both parties," Sebeih said, adding that the aim was to reach a technical service agreement. A senior Kuwaiti oil official told AFP last month that negotiations would involve three agreements: "Terminating concessions and the handover, a crude supply agreement, and a Japanese loan to finance Kuwaiti oil projects."
The official said "part of the agreement to terminate concession and hand over operations will include a technical assistance agreement for Japan." Sebeih has repeatedly said 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 month 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)
