AOC and Kuwait Try to Finalize Khafji Agreement

Arabian Oil Co. has signed memorandum with the Kuwaiti government that compels both parties to try to reach an agreement by Jan. 29 to allow Arabian Oil to continue tapping Kuwait's Khafji oil field. The memorandum was signed by Arabian Oil President Keiichi Konaga and Kuwaiti Oil Minister Adil Khalid as-Sabih. The accords would allow AOC to continue producing crude oil at the offshore field beyond January 2003, when its current concessions there expire.

The Khafji oil field straddles the border between Kuwait and Saudi Arabia. AOC lost concessions to the Saudi Arabian portion of the same oil field in February last year. AOC intends to make every effort to strike the agreements as speedily as possible so as to secure involvement in drilling oil in the divided offshore field beyond January 2003, so that supply can continue uninterrupted. The five accords whose specifics Arabian Oil and Kuwait are seeking to devise by Jan. 29 include one that would allow Arabian Oil to buy crude from Kuwait on a long-term basis. Another agreement would allow Kuwait to purchase technical support from Arabian Oil for a new drilling company which the Kuwaiti government plans to set up, so that it can tap crude oil in the Khafji field by teaming up with Arabian Oil.