By the OGJ Online Staff
LONDON, Oct. 29 -- Kuwait's cabinet has approved a "statement of principles" for negotiations to allow Japan's Arabian Oil Co. (AOC) to continue operating Khafji field in the Kuwaiti sector of the Neutral Zone.
AOC, Japan's largest producer, holds a concession in the offshore zone shared by Kuwait and Saudi Arabia that is due to expire in January 2003.
Kuwaiti Oil Minister Sheikh Adel al-Sebeih, who was attending an Organization of Petroleum Exporting Countries meeting in Vienna Monday, said the cabinet met Sunday and approved a Supreme Petroleum Council decision on principles for negotiations
That nonbinding pact was reached Sept. 18, allowing talks to proceed on terminating the concession and reaching a service agreement that would give AOC a crude oil supply agreement.
AOC's negotiations with Kuwait gained importance after the company lost its 40-year-old concession for drilling in the Saudi portion of the field in February 2000.
The Japanese company produces 140,000 b/d in the offshore neutral zone.
Saudi Arabia and Kuwait each have a 10.9% of AOC. The main Japanese shareholders include Tokyo Electric Power Co., Kansai Electric Power Co., and Nippon Steel Corp.
