Saudi Arabia's Cabinet has given final approval to an agreement that extends an oil concession held by US major Chevron in its Neutral Zone shared with Kuwait. The zone contains 5 billion barrels of proven oil reserves shared between the two countries and produced 600,000 barrels a day in 2007, according to information on the website of the US Energy Information Administration. The 60-year deal was first granted in 1949 to a company founded by US industrialist Jean Paul Getty. “The Council of Ministers has decided to approve the extension and amendment agreement between Saudi Arabia and Chevron Saudi Arabia at the Neutral Zone,” Saudi state news agency SPA reported on Tuesday. SPA gave no further details on the extension or amendment. In July, the Saudi Cabinet authorized the oil minister to sign an extension. Saudi Arabia and Kuwait share the estimated 550,000 barrels per day (bpd) output from the Neutral Zone. The zone is a region between Saudi Arabia and Kuwait that dates back to 1920s treaties to establish regional borders. Chevron operates the Wafra, Humma, and South Umm Gudair oilfields in the zone. These fields contain 2 billion barrels of proven reserves and total production of about 260,000 barrels a day of Arab Heavy oil. In a statement by Chevron issued from San Ramon, California on Wednesday, it said the agreement grants Chevron the right to operate on behalf of the Saudi government for its 50 percent undivided interest in the petroleum resources of the onshore area of the Neutral Zone. Under the agreement, Saudi Arabian Chevron (SAC), a subsidiary of Chevron, will continue to explore for and produce crude oil and natural gas on behalf of the Kingdom in the onshore NZ. The field operations are managed jointly by SAC and Kuwait Gulf Oil Company. “We are extremely pleased and honored that Chevron will continue to partner with the Kingdom of Saudi Arabia in developing the petroleum resources of the Partitioned Neutral Zone and the Kingdom,” said Chevron Chairman and Chief Executive Officer David J. O'Reilly. “Chevron and predecessor companies have worked closely with Saudi Arabia for more than 75 years and have played a significant role in the development of its petroleum industry. We are committed to helping develop the potential of the Partitioned Neutral Zone fully and responsibly.” “The extension of the agreement will ensure that important supplies of much-needed energy continue to reach world markets,” said O'Reilly. “The benefits of the extension will be realized both within the region and globally.” “We see tremendous opportunities in the PNZ,” said John Watson, executive vice president, Strategy and Development, Chevron. “With the extension of this agreement, our partnership expects to apply innovative technology to grow the recoverable reserves, create jobs and provide other benefits for the region.” “In particular, we are very excited about the possibility of making full-field development of steamflood technology a reality in the PNZ,” said Watson. “We are making solid progress in our series of projects to validate the feasibility of utilizing steamfloods to produce the extra heavy oil of the Eocene carbonate reservoirs. If successful, this would mark the first time that this enhanced oil recovery technology has been employed to produce commercial quantities of oil from a carbonate reservoir anywhere in the world.” Saudi Arabian Chevron and the Kuwait Gulf Oil Company, operator for Kuwait's equal 50 percent undivided interest in the petroleum resources of the onshore PNZ, jointly operate four fields in the area - Wafra, South Umm Gudair, South Fuwaris and Humma - that produce mainly heavy crude from 10 reservoirs. In 2004, the 3 billionth barrel of oil was produced in the onshore PNZ. __
