New limits on oil production were established during recent OPEC meetings on November 29, a bid to jumpstart a market that’s seen revenues cut in half or more. In the wake of that announcement, both Saudi Arabia and Kuwait announced that the two currently-shuttered oil fields the countries share will not cause them to go past those limits, should the fields be opened in the near future.
Right now, no target date for resumption of oil production has been hammered out. However, once things get up and running, the Saudis and Kuwaitis will simply reduce production at other fields in order to allow for regular production.
The Khafji field was the first to close in October 2014, though the reason was environmental, as opposed to the economic toll that’s plagued the industry and led to the production cut. This offshore field is actually part of the joint venture between Saudi Arabia and Kuwait.
In May 2015, the Wafra field was closed due to issues pertaining to equipment access and the ability to obtain work permits. Saudi Arabia had contracted with Chevron to run the project.
The production cut will mean that Saudi Arabia will now be producing 486,000 barrels less than before. That number is nearly four times as much as Kuwait’s 131,000 amount. When Khafji and Wafra come back on line, it could mean some steep cutbacks down the road. That’s because the maximum daily capacity is estimated at more than 500,000 barrels.
That cut by Saudi Arabia seems small when looking at the country’s level of production in November: 10.53 million barrels per day. In contrast, Kuwait stood at 2.95 million, with the Kuwaitis expected to be extremely vigilant when it comes to monitoring both their own and other countries’ total oil output.