Flash Points: UAE-Saudi Border Back in Focus

Copyright © 2021 Energy Intelligence Group

The United Arab Emirates' latest push to settle its decades-old border grievances with Saudi Arabia will start with outstanding maritime borders, but the negotiations should also reopen the sticky issue of the southern land border -- home to giant oil and gas fields -- where the UAE has argued it got a raw deal in a 1974 treaty. With the formation last week of the new Council of Border Affairs, chaired by influential Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed, the UAE has assembled its strongest team yet to argue its case. The council includes the country's two newly named deputy prime ministers, the foreign minister and the head of intelligence, among others. There is urgency to act. Saudi Arabia and Qatar -- which had been engaged in a longstanding and very public feud -- patched up their differences and inked their own boundary agreement in July 2008, without involving the UAE. This June, Abu Dhabi lodged complaints with the UN disputing the Qatar-Saudi agreement, claiming it violated terms of agreements signed by the emirate and Qatar in 1969 and 2006. In response, Saudi Arabia filed an official letter to the UN last month rejecting the Abu Dhabi-Qatar 1969 maritime border agreement and called for talks within the 1974 treaty. The UAE welcomes dialogue, but says the notes received from Riyadh "do not involve any change" in the Saudi position. Controversial Clause The UAE claims its late President Sheikh Zayed bin Nayhan signed the border agreement under duress, and that the treaty was never officially ratified. One core dispute involves Abu Dhabi's western border around the Khor al-Udaid waterway, to which Saudi Arabia and the UAE lay claim. Neither side mentioned the southern land border in their recent flurry of UN notifications, but new talks will likely re-examine the unusual oil field terms of the 1974 deal. Abu Dhabi is particularly annoyed by Article 3, which states that "all hydrocarbons in the Shaybah-Zararah field shall be considered as belonging to Saudi Arabia" -- even allowing Saudi drilling in UAE territory. The UAE tried to work out a production sharing arrangement -- as is common with border fields around the world -- but Riyadh has remained firm. It is not clear whether the UAE plans to revisit Shaybah-Zararah, but most observers say there is little chance of overturning Article 3. Shaybah, with 18 billion barrels of recoverable reserves and production capacity of 750,000 barrels per day, is central to Saudi Aramco's future production program. Discovered in 1968 but only brought on stream in 1998, Shaybah is tipped to eventually produce 1 million b/d and will provide much-needed ethane for the Saudi petrochemical sector (EC Oct.16,p6). Any treaty revisions are more likely to affect undeveloped fields that dot the frontier region. Just as the Saudis got all of Shaybah-Zararah, Article 4 of the 1974 treaty says any cross-border field belongs completely to the country in which it is "primarily located." In theory, further exploration could flip ownership as reserves are delineated. Over the years, Aramco and Abu Dhabi onshore operator Adco have tended to avoid the border areas -- the politics were too tricky and both countries had larger fields to develop. But rapid increases in domestic gas demand led Aramco in 2005 to drill the Kahlah-1 well near the frontier. Abu Dhabi responded the following year by drilling the same structure -- called Antar in the UAE -- around 8 kilometers from the border. Neither developed the field, but the exploration took place amid a diplomatic flare-up caused by an official UAE map showing unilateral changes to the 1974 pact (EC Jan.13'06,p13). Both sides are tackling large sour gas fields near the border -- Aramco and Shell are drafting a plan for Kidan, while 100 km away Abu Dhabi and ConocoPhillips are further advanced on Shah (EC Aug.7,p2). Adco is turning to smaller border fields to help boost the UAE's oil production capacity -- Qusahwira, east of Zararah, would be developed to 40,000 b/d, and Mender, near the Oman-UAE-Saudi border, to 16,000 b/d. Saudi Arabia also has prospects on its side of the 1974 border, including Ramlah, Magreb and Marzouk. Ramlah is too small to be commercially developed at the present time, said a Saudi source, while the other smaller fields would only be economic at very high prices. The UAE has failed to amend the 1974 agreement several times, so any renewed effort is a long shot. "It is binding on both sides," says Richard Schofield, a senior lecturer at King's College London and Mideast Gulf borders expert. The only room for negotiation is on Article 5, he says, which calls for the two sides to delimit the offshore boundaries "as soon as possible." In its November letter to the UN, Saudi Arabia said it is "keen" to delineate the maritime borders and has called on the UAE "several times" to implement Article 5, as under the agreement it has no access to the high seas from Khor al-Udaid. Alex Schindelar, Dubai Compass Points • SIGNIFICANCE: The rapprochement of Qatar and Saudi Arabia has put pressure on the UAE to resolve its longstanding complaints about the 1974 Saudi-UAE border agreement. The status of a number of oil and gas fields is at stake. • CONNECTION: With negotiations often hitting dead ends, the two sides have made their displeasure known through other means. The UAE has published maps that cut off Saudi access to the Khor al-Udaid waterway and used environmental reasons to object to a planned Saudi deepwater port, while Riyadh threatened to block the Qatar-UAE Dolphin gas pipeline and refused to endorse a causeway linking Abu Dhabi and Qatar. • NEXT: Abu Dhabi plans to develop the Shah, Qusahwira and Mender fields in the next five years, intensifying oil and gas activity near the border. If a deal isn't struck, future developments at Mender South, Rabbad and Salam could provide political fodder.

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