HOUSTON: US-based major oil company Chevron Corp said on Wednesday it extended by 30 years an agreement that allows it to drill for oil and natural gas in the Neutral Zone area shared jointly by Saudi Arabia and Kuwait.
The agreement extends the existing arrangement for 30 years, through Feb. 19, 2039. Under the agreement, Saudi Arabian Chevron, a subsidiary of Chevron, will continue to explore for and produce crude oil and natural gas in the Neutral Zone on behalf of Saudi Arabia.
The concession, approved by Saudi Arabia’s cabinet in July, is the only oil production agreement that survived the Saudi nationalization of the oil industry in the 1970s.
The 60-year deal was first granted in 1949 to a company founded by US industrialist Jean Paul Getty, helping make him the richest man in the United States.
Saudi Arabia and Kuwait share the estimated 270,000 barrels per day (b/d) of onshore production from the Neutral Zone.
Chevron’s net production after royalties is 110,000 barrels per day, mostly heavier grades that trade at a discount to benchmark West Texas Intermediate oil. Chevron could book some of those reserves at the end of 2008. The zone is a region between Saudi Arabia and Kuwait that dates back to 1920s treaties to establish regional borders.