Kuwait Approves AOC Concession Renewal
Kuwait's Supreme Petroleum Council has approved the revised concession agreement with Japan's Arabian Oil Company in the Neutral Zone. The new concession agreement will be effective January 4, 2003 and replaces the expiring 40-year concession agreement currently in place.
The new agreement gives AOC the right to buy oil from Kuwait over a 20-year period. AOC will also provide technical services to Kuwait for an initial five years, which can be rolled over. Under the new terms, Kuwait will sell AOC not less than 100,000 barrels per day (bpd) from the Zone's production at prevailing market prices, while AOC will extend soft loans to finance some Zone operations at lending rates below international market levels.
AOC lost its concession on the Saudi side of the Neutral Zone in 2000 due to differences over terms.
The loss of half of the company's main oil producing business was seen as a factor behind AOC's decision to seek a merger with unlisted Fuji Oil Co Ltd, an oil refining firm. The two firms, which announced in January they had started talks to integrate their businesses, will set up a holding company on January 31, 2003.