The recent re-emergence of a deep-seated dispute between Iran and Kuwait over an offshore jointly-owned gas field, whose development has long been delayed due to its contested ownership, raises questions and skepticism about the viability of the ongoing Chinese-brokered rapprochement between Iran and Saudi Arabia. Speculation is rife on this issue, especially because Riyadh is actively engaged in this dispute due to its sharing of offshore oil and gas fields with Kuwait.
The field in question, known as Arash in Iran and as Al-Dorra in Arab countries, lies in northwestern Persian Gulf waters, sections of which are in undelineated water borders between Iran and Kuwait. The two countries have been engaged in on-again, off-again talks to resolve the issue of the field’s ownership since 1960; nevertheless, geopolitical complexities, technical issues, and legal aspects of the case such as conflicting interpretations of international maritime law have made the energy dispute intractable until the present. The most recent round of talks has continued for several years—most recently in Tehran in March—but no agreement has been reached.
Throughout the dispute, both Iran and Kuwait have sought to access the rich reservoir without the other side’s input, but every major drilling initiative has been adjourned pending its resolution. Finally, Kuwait and Saudi Arabia jointly agreed last year to develop the field—an agreement that Tehran condemned as “illegal”, arguing that any extraction from the Arash/Dorra field required its permission as well. The Kuwaiti government recently announced a four-year plan (2023-27) to supply necessary infrastructure equipment for oil and gas recovery from the field, and Iran has already announced that it was close to starting drilling.
Appetite for a New Crisis?
It was against this backdrop that Iran and Saudi Arabia set aside their differences and agreed last March to resume their long-dormant diplomatic ties under the aegis of a deal mediated by China. Afterward, signs emerged of rapprochement between the two former foes: Iranian and Saudi ambassadors to various nations held meetings; reciprocal invitations were sent for senior officials in each country for state visits; state media in both nations did not cease to praise the other side; and the Riyadh showed more hospitality than ever for Iranian hajj pilgrims following past tragic events. In parallel with the re-establishment of diplomatic ties between Tehran and Riyadh, marginal issues have appeared, but both sides have kept a lid thereon to head off any prejudice to their fledgling ties.
In mid-June, Saudi Foreign Minister Prince Faisal bin Farhan Al Saud traveled to Tehran and met with Iranian President Ebrahim Raisi and Foreign Minister Hossein Amir-Abdollahian. The Iranian and Saudi foreign ministers’ joint press conference was moved to another room after the Saudi delegation objected to a hanging photo of slain Iranian general Qassem Soleimani in the background. That minor incident was followed by the daylong detention of hardline Shi’a ideologue Ali Akbar Raefipour during his visit to Mecca to perform the hajj ritual. These two incidents gave rise to speculation about the viability of Tehran-Riyadh’s nascent ties, but in the end, both sides handled them skillfully, further emphasizing their firm determination to bring the peace agreement to fruition.
Barely two weeks passed after Prince bin Farhan visited Tehran when a senior Iranian official’s remarks about preparation in Iran for drilling in the Arash/Dorra field, following a decade-long hiatus, brought the Iran-Kuwait-Saudi gas dispute once again into the public eye. The remarks by Mohsen Khojasteh-Mehr, CEO of the National Iranian Oil Company (NIOC), elicited a harsh reaction from foreign ministry officials and media in both Kuwait and Saudi Arabia, who claimed in unison that the Al-Dorra was owned exclusively by the two of them and that Iran had no share in the field whatsoever. Controversial remarks by Saudi foreign ministry officials only added to the complexity of the already-labyrinthine issue.
In addition to worsening Iranian public mistrust of Saudi Arabia, the Saudi position on the oil field drew anger from some political figures and media in Iran, casting doubt on Riyadh’s real intention in normalizing ties with Tehran and “unfriendly machinations by Kuwait” and “strange stances” adopted vis-à-vis the Arash field. Conservative outlets otherwise friendly to Raisi unanimously accused his administration of diplomatic laxness, asserting that the Iranian government’s policy had encouraged neighboring nations to express excessive demands about joint oil fields. They went further to claim that if Saudi Arabia pressed its claims in the gas field dispute, it would imply the “end of the Iran-Saudi honeymoon.” Headlines on the issue in Iran included, “Saudi stab in Iran’s back; Arash gas field lost”, “Arabs devouring regional energy reserves” and “Pillaging Iran’s gas reserves in broad daylight”—each article offering an extremely critical analysis of the status quo and heaping scorn on Raisi for allowing the situation to deteriorate.
Following Iran’s 1979 revolution, there has been much fluctuation in Kuwaiti-Iranian relations. With a population that is about one-third Shi’a, Kuwait has to various extents tried to balance its relations with Iran and the other Gulf Cooperation Council (GCC) states. Initially, Kuwait supported GCC states’ policies aimed at countering Iran’s clout in the region. Relations between the two countries improved in the 1990s; however, when Saudi Arabia cut ties with Iran in 2016, Kuwait followed suit, downgrading its relations. Although Iran initially attempted to keep its full staff in place, it also faced consequences after a Kuwaiti court convicted several members of a terror cell with alleged links to Iran and Hezbollah. Iran rejected the allegations as “baseless,” but following this development, Kuwait closed the Iranian cultural mission and related offices in the country and expelled several Iranian diplomats. Six years later, it restored diplomatic ties with Tehran.
The Saudi-Kuwaiti agreement for developing the Arash field was signed last year before Tehran and Riyadh resumed their ties. Although Iran criticized the Saudi-Kuwaiti agreement at the time, the recent restoration of relations could help settle the maritime dispute between Iran and Kuwait. One key point to highlight is that Iran and Saudi Arabia ended their yearslong tensions out of necessity; in a bid to terminate the war in Yemen and prepare safe conditions for investment with a view to its Vision 2030, Saudi Arabia needed to normalize ties with Iran, while Tehran also sought to improve its ties with neighboring states in a bid to escape its political and economic isolation and counter tough economic sanctions it has been facing over its nuclear program. A lasting settlement to the gas field dispute—no matter which side benefited the most—would provide a windfall for all three countries.
Managing Tensions
Meanwhile, the reaction shown by both Tehran and Riyadh vis-à-vis the gas field dispute indicates that neither side is willing to immediately return to their pre-2023 tension. Saudi statement was not as firm as Kuwaiti’s over the Iranian decision to start drilling. Only unnamed Saudi political figures confirmed Kuwait’s argument about the Dorra field, in a clear sign of Riyadh’s reluctance to add to tensions with Tehran. Evidently, the Saudis are trying their best to keep the maritime dispute from adversely impacting their newly improved ties.
Tehran’s approach towards this issue bears a striking resemblance to Riyadh’s. Iranian foreign ministry spokesman Nasser Kanaani reiterated the necessity of negotiations and settlement of the issue through diplomatic channels. Mostafa Nakhaei, the spokesman for the Iranian parliament’s Energy Committee, said: “We have discrepancies about the joint Arash gas field, which we should resolve first and foremost through diplomatic talks. However, if for any reason whatsoever negotiations fail, we will follow up on the issue within a specific legal framework by engaging international bodies.” Still, more importantly, the Islamic Revolutionary Guards Corps (IRGC) leadership, known for its bellicose and hostile rhetoric when Iranian interests have been threatened in similar situations, has steered clear of any comment—at least so far. What is clear is that the Raisi administration views the agreement with Saudi Arabia as a breakthrough, and does not intend to harm it due to a comparatively minor dispute over a gas field.
Moreover, some analysts and former diplomats in Tehran maintain that the Raisi administration should refrain from showing oversensitivity to the Arash field dispute, as doing so would likely cause difficulties for Iran-Saudi relations. These analysts argue that Kuwait, rather than Saudi Arabia, is primarily responsible for recent moves regarding the disputed area, and speculate that its leaders dragged Saudi Arabia into the dispute in a bid to boost their bargaining chip against Iran. Therefore, Tehran is advised to behave “maturely” and avoid escalating the situation.
Regardless of the responsibility for the recent escalation, the Arash dispute has posed a new challenge to Iran. On the one hand, any harsh reaction on the part of Iran would revive past tensions; on the other, Iran’s hesitation would further embolden Kuwait and Saudi Arabia to develop the field on their own without engaging Iran, and the Iranian government would face a flurry of domestic criticisms for failing to defend Iranian interests and territorial integrity. Furthermore, Iran’s silence on the Arash field would likely be perceived as a weakness by its neighbors, which could lead its Arab neighbors to pursue more assertive actions in their disputes with Iran. Arash is the largest disputed gas field, but it is not the only one; Tehran altogether shares around 27 hydrocarbon fields with its neighbors and contests the precise dimensions of their ownership. To resolve some of these disputes, Iran has either gone through diplomatic channels or resorted to other levers of pressure and even military force. In the Arash case, although military action is an unlikely scenario, the dispute is likely to harm Tehran-Riyadh ties and bring the countries back to years of proxy war.
Normally, when relations are in a stable state, diplomats can take their time discussing the matter; however, an escalating series of reactions to the Arash dispute would likely frustrate decision-makers and officials in Iran, Saudi Arabia, and Kuwait and overshadow ongoing efforts to implement the Saudi-Iranian détente. In other words, once relations between the two countries are formally restored, the dispute over the Arash/Dorra field is likely to be the first issue to test them.
These facts necessitate more than ever the engagement of a mediator to help bring an end to the dispute over the joint gas field. China, Qatar, and Oman could be able to fill this role. China was instrumental in the rapprochement between Iran and Saudi Arabia and is viewed as the guarantor of peace between the two nations. Chinese Ambassador to Kuwait Zhang Jianwei was recently quoted as saying that the dispute over the field had to be settled through talks and friendly consultations, rather than coercion or force.
The Importance of Mediation
If China declines to mediate the issue, Oman and Qatar are two other key regional players with friendly ties to all three nations. Either is well-placed to help the trio end this crisis, especially as time passes, prominent officials in the three nations lay emphasis on their national rights and resources.
It must also be mentioned that the Arash dispute is not an isolated case. In recent years, several GCC states had disputed ownership of regional oil and gas fields. The best-known instance of this was the Khafji field, which Saudi Arabia and Kuwait jointly own; they ran into a dispute in 2014 but resumed recovery from their respective shares in late 2019. A diplomatic and peaceful settlement of the Arash/Dorra gas dispute would help upgrade cooperation between Iran, Saudi Arabia, and Kuwait, much as differences between Saudi Arabia and Kuwait over the Khafji and Wafra oil fields resulted in their cooperation. Iran and Qatar have also been jointly recovering gas from the giant offshore South Pars gas field, another good example to follow.
While Iran has fought vigorously for its claims to the disputed gas fields in the Gulf, it has lagged behind its partners in recovery from most jointly-owned oil and gas fields, including South Pars, due to sanctions. Therefore, settling the territorial dispute over the Arash gas field would be just the beginning of the story for a reservoir. Only after the lifting of Western sanctions can Iran gain the necessary investment to make the most of its stake in the Arash field.
The other four gas fields that Iran shares with Saudi Arabia are instructive in this regard. The Saudi government has used Western cutting-edge technology to develop its fields and outcompete Iran, which relies heavily on 1980s-era extraction technology and is far less efficient than its Western counterpart. On this basis, even if Iran gains the most from the Arash/Dorra case’s resolution, Iran is unlikely to have any advantage over technologically-powered Kuwait and Saudi Arabia in prospecting for gas in this field. For Iran, then, the ongoing dispute mainly pertains to its perception of its national sovereignty and ensuring good neighborliness rather than substantial commercial gain.
Tehran and Riyadh have long been engaged in serious ideological and geopolitical disputes. The resumption of diplomatic ties between them partly ended these; however, the two rivals will continue to differ geopolitically into the future. Intensification of the dispute over the Arash-Al-Dorra field would expose the Tehran-Riyadh agreement to collapse—largely because their resumption of ties was not born out of genuine will and understanding, but at-the-moment urgency and need. In fact, the lauded peace agreement is fragile and unstable and can be strengthened only through confidence-building measures and increased cooperation and coordination. A dispute over this gas field could prove to be a factor of divergence, rather than convergence between Iran and Saudi Arabia. On the flip side, a lasting settlement to the issue—and future cooperation between Tehran and Riyadh in the Arash/Dorra field—would offer a chance to turn rivalry into collaboration, paving the way for better relations in other areas as well.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.
