Chevron confirms renewal of Neutral Zone deal with Saudi Arabia
San Francisco Business Times - by Steven E.F. Brown
Chevron Corp. confirmed that the government of Saudi Arabia approved extension of an oil concession in the Neutral Zone between that country and Kuwait.
News reports in July said the concession had been extended, but Chevron wouldn’t confirm it at the time, referring reporters to the Saudi government for comment.
This deal gives San Ramon-based Chevron the right to keep operating there on behalf of the Saudis for 30 more years.
Chevron (NYSE: CVX) gained control of the concession, in an area of land between Saudi Arabia and Kuwait, when it bought Texaco in 2001. Texaco got control after buying Tulsa-based Getty Oil, which had held the concession since 1949, in 1984.
Jean Paul Getty, better know as J. Paul Getty, bought the concession from Ibn Saud for $9.5 million plus $1 million a year and a 55 cent-per-barrel royalty after Paul Walton, a geologist he employed, saw a mound in the desert from an airplane and realized oil was likely to be found there.
Although oil wasn’t discovered there until four years had passed, when it finally was found in March 1953, it helped make Getty the richest man in America by the late 1950s.
Most Saudi oil fields are closed to outside companies because they were nationalized in the 1970s, but this agreement survived that process.
Saudi Arabian Chevron, a subsidiary of Chevron Corp., operates the fields there, which are held jointly with the Kuwait Gulf Oil Co.
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