Saturday, May 16, 2020

More Evidence That Saudi Is In Deep Trouble -- Along With Kuwait, Shutting Down A Field That Might Supply 0.5 Percent Of World's Entire Oil Supply -- May 16, 2020


Minutes later, 4:39 p.m. CT; -- exactly what I said an hour ago -- there's a bigger story here --

Minutes later, 4:32 p.m. CT -- this story is getting a lot of re-tweets over at twitter.
Most interesting: "analysts" are missing the big story here. They're focusing on the 100,000 bopd production. That's not the story. The question not (yet) being pursued -- why this particular field at this particular time? A hundred thousand bopd is the proverbial drop in the bucket for Kuwait/SA combined production. Fifteen million bopd. Hundred-K / 15,000-K = 0.7%.
Minutes later, 4:14 p.m. CT -- it's now being reported in Reuters --
Kuwait and Saudi Arabia have agreed to halt oil production from the joint Al-Khafji field for one month, starting from June 1, Kuwait’s Al Rai newspaper reported on Saturday. 
of the OPEC+ group of oil producers to cut output in a bid to reduce a glut in global supplies. Both Gulf states have also said they would make additional cuts beyond the agreed curbs.  
Someone is in serious, serious trouble. Or someone is tired of giving away their lifeblood to China, the same folks who released Wuhan flu and screwed everything up for Saudi Arabia.

Original Post

Disclaimer: I was quite distracted while writing this note. There may be content and typographical errors. If this is important to you, go to the source. 

Hello, possums, to steal a word from Dame Edna, if you have been following the Khafji oil field, owned and operated jointly by Saudi Arabia and Kuwait, this is quite a story.

A huge story.

To bring you up-to-date, from oilandgas360, just a few months ago, February 2, 2020:
Saudi Arabia and Kuwait have started preparation work to resume crude oil production from the Al-Khafji oil field jointly operated by the two countries, with initial output expected around the end of February (2020), two industry sources said. Saudi Arabia and Kuwait, both members of the Organization of the Petroleum Exporting Countries (OPEC), agreed last year to end a five-year dispute over the area known as the Neutral Zone, allowing production to resume at two jointly run fields that can pump up to 0.5 percent of the world’s oil supply.
More at the link, but one assumes a lot of time and effort went into bringing this field into joint production after five years of dispute. Can you believe it, this field was discovered in 1960?

So, this field was discovered in 1960, closed five years ago for "environmental reasons," under dispute since then, and finally, after billions of riyals invested, I assume, some fifty years later, with great fanfare, pomp and circumstance, Kuwait and Saudi Arabia make a huge announcement just a couple of months ago: "Hey, we're going to re-open this huge field under joint operation!"


Now, this .... drum roll .... from Twitter, less than an hour ago:

More from the oilandgas360 link:
Output is expected to reach 175,000 bpd from Al-Khafji and 145,000 bpd from Wafra after a year of restarting the fields, the official said. 
Kuwait newspaper Al-Rai reported on Sunday that production at Al-Khafji will start by the end of February and that testing of oil and gas pipelines and facilities has already begun. 
Al-Khafji is operated by Al-Khafji Joint Operations Co., a joint venture between Kuwait Gulf Oil Company and AGOC, a subsidiary of Saudi Aramco. It had been producing between 280,000 bpd and 300,000 bpd of Arabian Heavy crude before its closure in 2014 for environmental reasons.
"Environmental reasons" .... in the Mideast? LOL.

Halting oil production just three months after all the hoopla? Apparently Allah wasn't willing.

One wonders if there might be a whole lot more to the back story -- why it was decided to (apparently) completely shut down production. Certainly there were other options. I think there is much, much more to the story.

Speaking Of Possums
Practicing Homeopaths

Dame Edna

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