CVX Chevron Corporation

By Benoit Faucon and Summer Said 

Saudi Arabia and Kuwait are this week set to end a five-year dispute over oil fields in a territory shared between the two countries, people familiar with the matter said Sunday, paving the way for the return of half a million barrels a day of output.

The move would be a success for new Saudi energy minister Abdulaziz bin Salman, who has spent years trying to resolve differences over land and environmental rights in what is known as the neutral zone, the contested strip of oil-rich land between the two countries.

The fields, which normally produce about 500,000 barrels of crude oil a day, were shut down in late 2014 because of disputes over land-use and environmental permits.

The deal could still fall through at the last minute and the two countries, which reached a preliminary agreement in October, are unlikely to restart production immediately, the people familiar with the matter said.

The return would be gradual and would be offset by output reductions in other oil fields to comply with cuts agreed upon with other producers, they said.

In early December, Prince Abdulaziz headed a pact with the Organization of the Petroleum Exporting Countries and its Russia-led allies to deepen production cuts to 1.7 million barrels a day.

The negotiations to reopen the neutral zone have been backed by the U.S., which wants to ensure abundant quantities of oil remain available to make up for sanctioned Iranian and Venezuelan oil.

U.S. oil company Chevron Corp., which operates an onshore field in the neutral zone, said it continues to monitor the situation. "Saudi Arabian Chevron remains committed to the region and is focused on supporting operational activities to maintain readiness for a production restart when the time comes," Chevron said.

Write to Benoit Faucon at benoit.faucon@wsj.com and Summer Said at summer.said@wsj.com

(END) Dow Jones Newswires

December 22, 2019 13:56 ET (18:56 GMT)

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