Japan’s Arabian Oil Co. on Wednesday said it has struck a deal with the Kuwaiti government that will allow it to continue operating in the Khafji oil field after its drilling rights expire Jan. 4.

The parties will sign a final agreement after gaining approval from the Kuwaiti government, the company said.

Under the new agreement, concluded late last week, Arabian Oil will be contracted by from state-owned domestic companies to operate the oil field and sell oil obtained from the wells.

This will allow the company to procure at least 100,000 barrels of crude oil a day for shipment to Japan, for 20 years.

The existing agreement with the Kuwaiti government gives Arabian Oil the drilling rights and allows it to own the oil produced as well as the production facilities.

But under the new agreement, Arabian Oil’s involvement is reduced to a contractor; it will also be called on to provide training and other technical services to the public firms that will hold the drilling rights.

This arrangement is due to a new clause in Kuwait’s Constitution that restricts the mining of the country’s natural resources to foreign firms.

With the new agreement, “we can achieve three goals,” said Arabian Oil President Keiichi Konaga. “Substantial involvement in the Khafji oil field, a stable supply of oil to Japan, and reasonable profits for us.”

According to the agreement, Arabian Oil will enter a five-year technical service contract with Kuwait Gulf Oil Co., a public firm set up last month to take over operations in the oil field from the Japanese company. The contract can be extended every five years.

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