Kuwait's cabinet has approved a "statement of principles" signed last month with Japan's Arabian Oil Co. (AOC), allowing the two sides to begin negotiating a settlement, KUNA news agency reported Monday, October 29.
Oil Minister Adel Al-Sebeih told KUNA after Sunday's cabinet meeting that ministers approved a Supreme Petroleum Council (SPC) decision earlier this month formally agreeing on the statement of principles. Kuwait signed the statement, which is non-binding, with the AOC on September 18, allowing the start of talks on terminating an AOC concession and reaching a service agreement.
A senior Kuwaiti oil official has told AFP 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. Sebeih told KUNA that the cabinet also discussed an SPC decision to establish a new national company to replace the AOC as a Kuwaiti representative in joint operations in the zone.
A successful outcome to negotiations with Kuwait is crucial for AOC after it lost a 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 have a 10.9 percent stake each 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)
