The joint onshore and offshore oilfields in the Neutral Zone between Saudi Arabia and Kuwait were shut down for almost four years, with half a million barrels per day of capacity taken off the market. Production in the zone is unique, not only because it is shared equally by two countries, but because of the involvement of international oil major Chevron, the only one of the Seven Sisters to still hold a concession to Saudi oilfields. The structure of production in the zone is complex. The onshore fields in Wafra are managed by the Wafra Joint Operations Co., a joint venture between Saudi Arabian Chevron and the Kuwait Gulf Oil Co. The onshore fields in Khafji are operated by the Khafji Joint Operations Co., a joint venture between the Aramco Gulf Oil Co. and the Kuwait Gulf Oil Co. So in one zone, there are two joint ventures operated by three companies. The legal and sovereign environment is also complex and unique. We have Khafji, which is part of Saudi Arabia, and we have Wafra in Kuwait. The fields in these areas extend beyond their borders, while the surface areas are managed by the two countries. For Chevron to operate on behalf of Saudi Arabia on Kuwaiti soil was a very delicate matter. The company was operating the onshore fields in Wafra and had its headquarters in Mina Saud in Kuwait. It employed many Saudis who resided and lived in Kuwait. Even production is not easy in the onshore part. The Wafra Joint Operations Co. relied heavily on Chevron’s expertise to produce the viscous and heavy crude from the aging fields in Wafra, where everything from using pumps to steam is applied. If that is not enough, then consider the offshore area’s proximity to Iran, how Saudi Arabia and Kuwait needed to demarcate the maritime borders for Al-Dorrah field, and the security risks involved in operating platforms in water in that area. It is a very complex operation that is hard to manage, but there was a system that gave each country the right to run the operations every three years. Any differences were bridged by the deep cultural and political ties between Saudi Arabia and Kuwait. So when production stopped four years ago in the fields, it was a serious matter. It was not just a halt to output, but the disruption of a unique system that had been operating for decades. But on Tuesday, Saudi Arabia and Kuwait signed a memorandum of understanding to resolve all the issues around the zone. That is good news for Chevron and the Khafji Joint Operations Co., which should be busy preparing to resume production. Since production is very complex, preparations have been ongoing for some time, with big investments in maintaining the wells for this day. If the calculation is right, we should expect to see immediate output of half of the production from the zone, and full capacity in the next three to six months. That is also good news for Kuwait’s onshore fields, which have been pumping at full capacity for almost four years to compensate for the loss from the zone. Kuwait’s giant fields such as Burgan need to rest for a while. Other beneficiaries from this development are Asian customers such as Japan, which imports many cargos from the zone. Some analysts will think that this news means an extra 500,000 barrels per day being put into the market, but that will not happen. Saudi Arabia and Kuwait just agreed to work under the Organization of the Petroleum Exporting Countries production restraint system for another three to six months; whatever output is coming will mean cuts from Saudi and Kuwaiti fields. There are two projects in the zone that are vital for both countries. There is the Dorrah gas field, which is highly important for Kuwait, which wants more natural gas to power its industries and produce more electricity. The other project is the full field development of the steam injection project in Wafra. This might boost reserves in the ageing zone by another 5 billion barrels at least. The development of these two projects will have an important impact on both countries, but more importantly, Saudi Arabia and Kuwait have shown the world the depth and strength of their ties. • Wael Mahdi is an independent energy commentator specializing on OPEC and a co-author of “OPEC in a Shale Oil World: Where to Next?” Twitter: @waelmahdi Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News" point-of-view