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A question of sovereignty. (Cover Story Neutral Zone).

Article Excerpt
The urge to regain sovereign rights over hydrocarbon reserves in the Neutral Zone was one of the driving forces behind the Japanese operator, Arabian Oil Company, losing its drilling and production rights in both Saudi Arabia and Kuwait. Ashok Dutta and Angus McDowall assess the challenges that lie ahead

With the threat of war in Iraq, it is increasingly difficult to be neutral in the Gulf. For many, the issue of sovereignty extends further than the demarcation of boundaries. The Neutral Zone (NZ) shared by Saudi Arabia and Kuwait is a case in point: there is no dispute over ownership or co-operation between the two countries, but the question of sovereignty remains to the fore. At the start of the year, the nationalisation of the NZ was completed when Japan's Arabian Oil Company (AOG) lost its drilling and production rights in the Kuwaiti portion of the NZ. On 4 January, AOG surrendered its 43-year-old rights to Kuwait Gulf Oil Company (KGOG) - the latest entrant on the list of nationalised Gulf oil companies operating in the upstream sector.

"It was a great feeling. What we have done is correct. We felt as if all our oil wealth was returned and we are now in total control," says Mohammad All al-Jazzaf, chairman and managing director of the recently-established KGOC.

KGOC's establishment was the second stage in...

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