Al Durra means “the pearl” in Arabic – but from Kuwait’s point of view, it is a pearl glinting at the bottom of the sea, tantalizingly out of reach. The large Al Durra, or Dorra, gas field lies in the Gulf between Kuwait, Saudi Arabia, and Iran. Recent pronouncements and claims – including the March Saudi-Iranian agreement to normalize diplomatic ties – raise again the controversial question of who will grasp this treasure.
Dorra lies partly in Kuwaiti waters, partly in the Kuwaiti section of the offshore Partitioned Neutral Zone with Saudi Arabia, which would at first glance indicate an equal division of the resources in the shared waters of the two countries. However, while the Saudi-Iranian maritime border was demarcated in 1968, the Iran-Neutral Zone and Iran-Kuwait boundaries remain disputed. Iran says that part of the field, which it calls Arash, therefore lies in its territory. Kuwait argues that Iran’s demarcation of the border between the two countries, between Kharg (an Iranian island) and the Kuwaiti mainland, is flawed since it ignores Kuwait’s Failaka Island. Iranian analysts, though, insist the demarcation follow the continental shelf rather than the land border. The demarcation determines the legal claim – and extent of share – of each side.
Kuwait and Saudi Arabia reached initial agreement on developing the field in March 2022, and both over the last week have called on Tehran to rejoin talks on the maritime border demarcation. Kuwait reiterated its position that only it and Saudi Arabia have claims on the field, although Kuwaiti diplomats held talks with Iran in March on boundaries.
Kuwait’s oil minister, Saad Al Barrak, told Saudi state television Al Ekhbariya in an interview July 9, “This is an exclusive right of Kuwait and Saudi Arabia in the Durra field, and whoever has a claim must start demarcating the borders. And if it has a right, it will take it according to the rules of international law.” He continued, that Iran “has claims that are not based on a clear demarcation of the maritime borders.”
Dorra holds 10-13 trillion cubic feet of gas and could produce 1 billion cubic feet of gas per day and 84,000 barrels per day of condensate, effectively a very light oil. The gas in particular would be of minor significance to Iran and Saudi Arabia but important to Kuwait, which produced only 1.29 bcf/d of gas in 2022, while consuming 2.1 bcf. Kuwait also burns substantial amounts of fuel oil for power generation and imports liquefied natural gas. Under the March 2022 agreement, Kuwait and Saudi Arabia would split the gas equally and pipe it separately to their own territories. They have not commenced development, though, with Iran’s claims still a deterrent.
In 2022, Kuwait opened a new, large LNG import terminal with a capacity of 22 million tons annually, or about 2.9 bcf/d at its maximum rate. Kuwait has long-term import contracts with QatarEnergy and Shell, which means it probably did not pay the extreme LNG spot prices of 2022. Nevertheless, LNG is still costly compared to relying on domestic production. Most of Kuwait’s own gas output is associated – a byproduct of oil production – giving it little flexibility when it adheres to OPEC cuts or enters the higher-demand summer period. Dorra, as Kuwait’s only large, conventional nonassociated gas field, could ramp up and down as required.
Kuwait has also been trying since 2014 to relaunch exploration in its own undisputed offshore territory. It was explored by Shell in the 1960s, but only two small fields have been found there historically, with at least six dry wells drilled. Iraq offered its own limited marine acreage in 2018 but received no bids; now a Chinese company is shooting a seismic survey there and Baghdad may possibly seek interest again, which could also provide information about the adjoining Kuwaiti sector. Nawaf al-Sabah, CEO of Kuwait Petroleum Corporation, said the offshore resources could contribute 25% of the hydrocarbon targets in KPC’s Strategy 2040 plan.
Mohsen Khojasteh-Mehr, head of the National Iranian Oil Company, said in June that Saudi Arabia and Iran had begun preliminary work for cooperation on their shared fields. But he also declared that Iran was ready to begin drilling in Arash, and that a development plan had been presented to NIOC’s board of directors, apparently regardless of any agreement with the neighboring countries.
Iran says it shares 28 oil and/or gas fields with its neighboring Arab countries. At least four of these are between Iran and Saudi Arabia, two producing on the Saudi side only, and one not producing on either side. The fourth, the giant Marjan field, is currently being expanded by Saudi Aramco from 500,000 to 800,000 barrels per day at a cost of $21 billion, a centerpiece of its production growth plans. A relatively small part extends into Iran as the Foroozan field, which yields about 40,000 b/d. But the two countries have developed their sections competitively and do not have a joint development plan or any scheme of sharing the resources, a situation that advantages Iran as the holder of the significantly smaller share.
Conversely, Iran owns the larger share of the Farzad-B gas field, 12.5 tcf, but Saudi Arabia has developed its part, Hasbah, holding a reported 3 tcf, while Iran has yet to progress. Farzad-A, also undeveloped, produces in Saudi Arabia as the Arabiyah field. Finally, the Esfandiar oil field crosses into the Saudi part of the Neutral Zone, where it is known as Lulu, but has not been developed on either side. In August 2022, the Iranian Offshore Oil Company said it would develop Esfandiar in the next three years.
If Riyadh and Tehran indeed want to build on their reestablished relations under the March Chinese-brokered agreement, there are probably easier areas of energy-related cooperation – for example, on renewables or water desalination. If determined to develop a joint field, they would still face the barriers of U.S. sanctions, constricting access to finance and technology. Assuming they could get past that, perhaps under the umbrella of a new limited Iranian-U.S. arrangement, all their candidate-fields for joint exploration are problematic. Lulu-Esfandiar, being undeveloped on both sides, is the best bet, but its known resources are not very large, and it raises the same questions of the border claims around the Neutral Zone as Dorra.
A compromise could be to agree on how the costs and revenue would be split without prejudice to territorial sovereignty, similarly to the October 2022 U.S.-mediated agreement between Lebanon and Israel for the Qana gas prospect. Such “joint development areas” have sometimes been viable solutions to other disputed petroleum-rich maritime areas, particularly in the complicated archipelagos of Southeast Asia. Indeed, such considerations, first for grazing lands, then for oil, were behind the original establishment of the Neutral Zone in 1922 and its partition in 1969.
Iran’s deputy petroleum minister, Ahmad Asadzadeh, appeared to float such an option in March 2022, saying, “Even if the border is not demarcated, the field can be developed jointly using internationally tested models.” But even if such a joint development area covered Lulu-Esfandiar, Dorra, or all the contested part of the Neutral Zone, Kuwait would have to accede too, as it would have rights to half the Saudi share.
Kuwait might be nervous about missing out in the more amicable relations between Riyadh and Tehran. But it also has the most to gain from an eventual development of Dorra. Iran does not appear particularly inclined to move quickly on cooperation, and Saudi statements have continued to be strongly supportive of Kuwait’s position, so it probably should not worry imminently. But in a more constructive Gulf atmosphere, a deep dive for creative solutions could eventually help Kuwait – with its neighbors – grasp the pearl.
