In recent weeks, Iranian officials have made statements about a massive offshore gas field in the northwestern Persian Gulf that has long fueled tensions among Iran, Kuwait and Saudi Arabia. Effectively addressing these conflicting claims will require regional energy diplomacy and be an important test for the fledgling rapprochements between Tehran and members of the Gulf Cooperation Council (GCC).
GCC states refer to the gas field as al-Durra — Arabic for “the pearl” — while Iranians call it Arash. Discovered 56 years ago when maritime boundaries were not well defined in this body of water, the Durra/Arash Gas Field remains a delicate and controversial issue.
On March 21, 2022, Kuwait’s and Saudi Arabia’s energy ministers signed an agreement to develop the field in a joint venture between the Kuwait Gulf Oil Company and the Aramco Gulf Operations Company. Under the deal, the two GCC members are to equally divide the production of the field, which is situated in the Kuwaiti-Saudi Neutral Zone and expected to produce one billion standard cubic feet of gas a day. However, the Iranians, who claim a share of the field west of the Persian Gulf island of Kharg, which accounts for 40 percent of the Durra-Arash Gas Field, blasted the Kuwaiti-Saudi deal as illegal. Tehran’s position is that any arrangement involving production from the field must include Iran.
In June 2023, Mohsen Khojasteh Mehr, the director of the National Iranian Oil Company (NIOC), announced that Iranian-Saudi “preliminary work” in energy cooperation had commenced. He said that the two countries had “no disputed” shared fields. The NIOC director explained that his country is “completely prepared” to start drilling in the Durra/Arash Gas Field. Two weeks later, however, Kuwait’s Oil Minister Saad al-Barrak stated that the Kuwaitis and Saudis have “exclusive rights” to the field. He added that Iran’s claims “are not based on a clear demarcation of the maritime borders.”
The Saudi foreign ministry earlier asserted the same thing as the Kuwaitis. However, Iran’s former deputy oil minister, Mehdi Hosseini, has argued that “Iran’s border with the Neutral Zone is not defined, so if Kuwait believes Iran has no right to exploit the gas field, then by that logic, neither do they.”
In response to Iranian officials saying that their country was prepared to begin drilling in the Durra/Arash Gas Field, Kuwait invited the Iranians to a new round of talks on the maritime border dispute. But the talks did not take place and by July 27, 2023, Sky News Arabia reported that al-Barrak had announced Kuwait’s plans to commence “drilling and production” at the field without any border demarcation deal reached with its Persian neighbor. Three days later, Iran’s Shana news agency quoted the country’s Oil Minister Javad Owji declaring that “Iran will pursue its rights and interests regarding exploitation and exploration” of the Dorra/Arash Gas Field “if there is no desire for understanding and cooperation.” Owji also said that Iran had tried “the path of negotiation and understanding with our neighbors” but will “not tolerate any violation of its rights.”
Ultimately, these three countries must prioritize delineating their maritime borders to ensure that they all can benefit from the gas field. Mindful that gas demand is increasing in all of them, the field’s development would serve domestic networks with minimal if any effect on global gas markets. Kuwait’s demand for domestic gas resources is greater than that of Saudi Arabia and Iran but the latter two countries also are short of natural gas to meet their population’s needs. The territorial dimensions to the dispute are also a major concern for all three states.
The recent tensions over the field are playing out only a few months after Riyadh and Tehran reached a diplomatic normalization deal brokered by China. There have been questions raised about the depth and durability of this agreement. The contest over the natural resource wealth of the northwestern Persian Gulf provides more evidence that reconciliation could be a slow and fraught process.
One question is how the return of a Kuwaiti ambassador to Tehran and the restoration of full-fledged diplomatic relations between Saudi Arabia and Iran could impact their ability to resolve the dispute over the Durra/Arash Gas Field.
An optimistic assessment is that other Iranian Arab neighbors — Qatar, Iraq, and Oman — already develop gas and oil fields shared with Iran. It would serve regional states well if the Durra/Arash Gas Field is developed in a similar way to how Iran and Qatar began sharing the South Pars-North Dome field shortly after the end of the Iran-Iraq War in 1988. Indeed, Qatar’s astonishing economic ascendancy in the 2000s was largely attributable to Doha and Tehran’s ability to share ownership over this field based on respect for demarcated borders between the two countries.
Looking ahead, the Islamic Republic’s improved relationships with Kuwait and Saudi Arabia should help facilitate resolving this high-stakes dispute over the Durra/Arash Gas Field. However, for Tehran progress could be hampered by continuing U.S. and European economic sanctions which will impede Iran’s ability to access foreign investment and advanced technology. This has been the case with the South Pars field, which Iran counts on for 70 percent of its gas requirements. Numerous contracts with a host of foreign energy giants including France’s Total, Malaysia’s Petronas, and China National Petroleum Corporation have been signed and then abandoned due to U.S. sanctions. In July, Iran installed the first offshore platform for the final development phase (Phase 11) of South Pars. For now, Iranian companies are developing South Pars without foreign involvement, although Russia’s Gazprom may help out down the road.
If Iran, Kuwait, and Saudi Arabia can resolve their conflicting claims over the Durra/Arash Gas Field, it will add momentum to the Middle East’s current trend toward reconciliation and cooperation between regional rivals. It will be important to watch how hard Iran may push against Kuwait and Saudi Arabia in its claims to this disputed field. For Tehran’s leadership, the risk is either jeopardizing détente with Saudi Arabia or upsetting elements at home that criticize Ebrahim Raisi’s administration for not protecting Iran’s national interests and surrendering its share of this gas field to the Arab states of the Persian Gulf.
Giorgio Cafiero is the CEO of Gulf State Analytics, a Washington, DC-based geopolitical risk consultancy, and an adjunct fellow at the American Security Project.
Iran-Arab Reconciliation Challenged by Competing Claims to Natural Gas in the Persian Gulf
By Giorgio Cafiero
Middle East & North Africa
In recent weeks, Iranian officials have made statements about a massive offshore gas field in the northwestern Persian Gulf that has long fueled tensions among Iran, Kuwait and Saudi Arabia. Effectively addressing these conflicting claims will require regional energy diplomacy and be an important test for the fledgling rapprochements between Tehran and members of the Gulf Cooperation Council (GCC).
GCC states refer to the gas field as al-Durra — Arabic for “the pearl” — while Iranians call it Arash. Discovered 56 years ago when maritime boundaries were not well defined in this body of water, the Durra/Arash Gas Field remains a delicate and controversial issue.
On March 21, 2022, Kuwait’s and Saudi Arabia’s energy ministers signed an agreement to develop the field in a joint venture between the Kuwait Gulf Oil Company and the Aramco Gulf Operations Company. Under the deal, the two GCC members are to equally divide the production of the field, which is situated in the Kuwaiti-Saudi Neutral Zone and expected to produce one billion standard cubic feet of gas a day. However, the Iranians, who claim a share of the field west of the Persian Gulf island of Kharg, which accounts for 40 percent of the Durra-Arash Gas Field, blasted the Kuwaiti-Saudi deal as illegal. Tehran’s position is that any arrangement involving production from the field must include Iran.
In June 2023, Mohsen Khojasteh Mehr, the director of the National Iranian Oil Company (NIOC), announced that Iranian-Saudi “preliminary work” in energy cooperation had commenced. He said that the two countries had “no disputed” shared fields. The NIOC director explained that his country is “completely prepared” to start drilling in the Durra/Arash Gas Field. Two weeks later, however, Kuwait’s Oil Minister Saad al-Barrak stated that the Kuwaitis and Saudis have “exclusive rights” to the field. He added that Iran’s claims “are not based on a clear demarcation of the maritime borders.”
The Saudi foreign ministry earlier asserted the same thing as the Kuwaitis. However, Iran’s former deputy oil minister, Mehdi Hosseini, has argued that “Iran’s border with the Neutral Zone is not defined, so if Kuwait believes Iran has no right to exploit the gas field, then by that logic, neither do they.”
In response to Iranian officials saying that their country was prepared to begin drilling in the Durra/Arash Gas Field, Kuwait invited the Iranians to a new round of talks on the maritime border dispute. But the talks did not take place and by July 27, 2023, Sky News Arabia reported that al-Barrak had announced Kuwait’s plans to commence “drilling and production” at the field without any border demarcation deal reached with its Persian neighbor. Three days later, Iran’s Shana news agency quoted the country’s Oil Minister Javad Owji declaring that “Iran will pursue its rights and interests regarding exploitation and exploration” of the Dorra/Arash Gas Field “if there is no desire for understanding and cooperation.” Owji also said that Iran had tried “the path of negotiation and understanding with our neighbors” but will “not tolerate any violation of its rights.”
Ultimately, these three countries must prioritize delineating their maritime borders to ensure that they all can benefit from the gas field. Mindful that gas demand is increasing in all of them, the field’s development would serve domestic networks with minimal if any effect on global gas markets. Kuwait’s demand for domestic gas resources is greater than that of Saudi Arabia and Iran but the latter two countries also are short of natural gas to meet their population’s needs. The territorial dimensions to the dispute are also a major concern for all three states.
The recent tensions over the field are playing out only a few months after Riyadh and Tehran reached a diplomatic normalization deal brokered by China. There have been questions raised about the depth and durability of this agreement. The contest over the natural resource wealth of the northwestern Persian Gulf provides more evidence that reconciliation could be a slow and fraught process.
One question is how the return of a Kuwaiti ambassador to Tehran and the restoration of full-fledged diplomatic relations between Saudi Arabia and Iran could impact their ability to resolve the dispute over the Durra/Arash Gas Field.
An optimistic assessment is that other Iranian Arab neighbors — Qatar, Iraq, and Oman — already develop gas and oil fields shared with Iran. It would serve regional states well if the Durra/Arash Gas Field is developed in a similar way to how Iran and Qatar began sharing the South Pars-North Dome field shortly after the end of the Iran-Iraq War in 1988. Indeed, Qatar’s astonishing economic ascendancy in the 2000s was largely attributable to Doha and Tehran’s ability to share ownership over this field based on respect for demarcated borders between the two countries.
Looking ahead, the Islamic Republic’s improved relationships with Kuwait and Saudi Arabia should help facilitate resolving this high-stakes dispute over the Durra/Arash Gas Field. However, for Tehran progress could be hampered by continuing U.S. and European economic sanctions which will impede Iran’s ability to access foreign investment and advanced technology. This has been the case with the South Pars field, which Iran counts on for 70 percent of its gas requirements. Numerous contracts with a host of foreign energy giants including France’s Total, Malaysia’s Petronas, and China National Petroleum Corporation have been signed and then abandoned due to U.S. sanctions. In July, Iran installed the first offshore platform for the final development phase (Phase 11) of South Pars. For now, Iranian companies are developing South Pars without foreign involvement, although Russia’s Gazprom may help out down the road.
If Iran, Kuwait, and Saudi Arabia can resolve their conflicting claims over the Durra/Arash Gas Field, it will add momentum to the Middle East’s current trend toward reconciliation and cooperation between regional rivals. It will be important to watch how hard Iran may push against Kuwait and Saudi Arabia in its claims to this disputed field. For Tehran’s leadership, the risk is either jeopardizing détente with Saudi Arabia or upsetting elements at home that criticize Ebrahim Raisi’s administration for not protecting Iran’s national interests and surrendering its share of this gas field to the Arab states of the Persian Gulf.
Giorgio Cafiero is the CEO of Gulf State Analytics, a Washington, DC-based geopolitical risk consultancy, and an adjunct fellow at the American Security Project.
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