Colonial and post-colonial governments in the Middle East spent much time drawing “a line in the sand,” as historian James Barr termed it, to delineate their borders. With the discovery of offshore hydrocarbons, a line in the water became equally important. One of these blurred frontiers has again come under debate with revived Saudi and Kuwaiti plans to develop the Dorra gas field.

Dorra lies in the offshore section of the Partitioned Neutral Zone between Saudi Arabia and Kuwait. But in Tehran’s interpretation, it also extends into Iranian waters, where it is known as Arash. Discovered in 1967, it contains an oil reservoir with a deeper gas reservoir thought to hold 10-13 trillion cubic feet of gas (Iranian sources say 20 tcf) and 300 million barrels of oil.

While the Saudi-Iranian border is delineated, Kuwait and Iran have conflicting claims over the maritime boundary both of the Kuwaiti share of the Neutral Zone and Kuwait’s original waters. Thus, part of Dorra would be assigned either to the Neutral Zone or Iran, and the most northerly tip is disputed between Iran and Kuwait.

Cross-border fields worldwide are usually “unitized,” with an agreement on joint development and operations and a fair division of the revenue. Apart from the Neutral Zone, this is almost unknown in the Middle East, where numerous fields span the Iran-Iraq land border and maritime borders between Iran and its Gulf Cooperation Council neighbors all the way down the Gulf. These fields are developed individually, with an incentive for both sides to produce as quickly as possible before their competitor drains the resource. Notably, Iran shares its supergiant South Pars gas field with Qatar’s North Field, a mainstay of the global liquefied natural gas industry. Two major offshore Saudi gas-producing fields, Arabiyah and Hasbah, also extend over the border but have not yet been developed on the Iranian side.

Saudi Arabia and Kuwait were themselves in dispute over their joint management of the Neutral Zone, with its production shut down from 2014-15 until a resolution was reached to restart output in December 2019. Since then, there has been improved cooperation and fair progress on new projects. This includes plans to send up to 50 million cubic feet per day from the onshore Wafra field and 24 mcf/d from the offshore Khafji field to Kuwait.

Under an initial deal signed March 21, Kuwait and Saudi Arabia now plan to develop Dorra to produce 1 billion cubic feet per day of gas and 84,000 barrels per day of condensate (a light oil condensed from the gas). The gas will be equally split through pipelines to Al-Zour in Kuwait and Ras Al Khafji in Saudi Arabia, a change from previous proposals for all the gas to land in Saudi Arabia before half would be piped onshore to Kuwait, which the Kuwaitis rejected. Khafji Joint Operations, the Neutral Zone’s operating company, a joint venture of state corporations Kuwait Gulf Oil and Aramco Gulf Operations, would conduct the development, estimated at $7 billion in development costs. No timeline has been given, but realistically production might start around 2027 if the project goes ahead promptly.

But on March 26, Iran’s foreign ministry spokesman, Saeed Khatibzadeh, said this deal “goes against past negotiations and is illegal,” and that Iran “reserves the right to exploit it.” The deputy petroleum minister, Ahmad Asadzadeh, added that Iran had studied exploitation of the field, and that even without a demarcation of borders, it could be developed jointly. And the petroleum minister, Javad Owji, said Iran would begin drilling at the field shortly. An $80 billion gas investment plan announced in January, however, did not mention Arash.

On March 29, in a press conference with the French foreign minister, Kuwaiti Foreign Minister Ahmed Nasser al-Mohammed al-Sabah referred to tripartite negotiations on the maritime border, but he then clarified his country’s position that Dorra belongs entirely to Kuwait and Saudi Arabia.

Iran held talks with Kuwait on delineating the border in 2000 and proposed a joint development in 2010. While Iran generally gets on reasonably with Kuwait, Riyadh and Tehran broke diplomatic relations in January 2016, although there have been some recent tentative signs of engagement. On April 13, Saudi Arabia and Kuwait invited Iran to negotiate on their joint border, while reaffirming their sole right to Dorra – even though it is only the Kuwait-Iran boundary that has not been agreed upon.

All three countries involved in Dorra need the gas, Kuwait more than Saudi Arabia and Iran. Kuwait’s electricity consumption, virtually all oil and gas fired, rose 7% to a record in 2021 and will increase more this year. Nearly all the country’s gas production is associated with its oil output and is insufficient to meet demand; development of the Jurassic gas resources in northern Kuwait has been slowed by technical difficulties and the usual political debates.

An LNG importer since 2008, Kuwait commissioned its first permanent import terminal at Al-Zour in July 2021 and brought in 193,000 tons in January, even though it is a low-demand month. It has contracts with Qatargas and Shell to buy a total of 4 million tons per year, equivalent to 0.5 bcf/d. Their price is probably indexed to oil, sparing Kuwait from record-high traded gas prices, but still costly.

Dorra is less critical for Saudi Arabia but still useful. The kingdom wants to boost gas output by half by 2030 as part of plans to replace oil in power generation entirely with gas and renewables. Production of about 11 bcf/d of sales-quality gas would need to rise to about 19.5 bcf/d to meet overall demand, and existing project plans do not quite bridge the gap.

The Iranian government wants to boost the current output of saleable gas of more than 24 bcf/d by half over the next eight years. But actual output will fall short of this level because of the continuing impact of U.S. sanctions, even if eased, the absence of recent foreign investment, and the need to install complex compression equipment at the key South Pars field just to keep output level. Iran suffers from frequent gas shortages and has cut supplies to Turkey and Iraq repeatedly.

Figures for Arash’s reserves suggest Iran would be claiming between one-quarter and half of the field, and previous seismic surveys indicate about 30% lies within the Iranian claim. Its share of output, in the rather unlikely case of a deal being reached, would therefore be from 1% to 2% of national gas production. Iran has always prioritized the development of cross-border fields, particularly when a neighbor has started development, but this matter of principle has still often not resulted in production.

A cooperative deal over Dorra/Arash and the borders looks unlikely to happen soon, even if relations improve. The involvement of three countries, two of them major regional rivals, does not help. Even the previous dispute between Kuwait and Saudi Arabia over operation of the Neutral Zone, a relatively minor one between two GCC partners, took six years to resolve. More likely, if Kuwait and Saudi Arabia do press ahead, Iran will protest. It will not find a foreign partner to develop Arash because of the border dispute, and Kuwait will object to any attempts by Tehran to drill in the contested area. This sets up a confrontation between Iran and one of the GCC states with which it has the most cordial relations.