The shut down of the jointly-operated Wafra onshore oilfield between Saudi Arabia and Kuwait, is set to be extended into next month after the distribution of a memorandum telling all non-vital staff to take leave as of August 1, pan-Arab daily Asharq Al-Awsat reported on Thursday.

The Wafra field was first shut for maintenance on May 11 for two weeks in a move apparently aimed at giving the Gulf Opec allies time to solve a longstanding dispute.

On May 27, Chevron, which operates the oilfield on behalf of Saudi Arabia, said Wafra would remain shut until difficulties in operating there are resolved.

The memorandum, which the newspaper said it had obtained, was signed by Chevron and the Kuwaiti Gulf Oil Company, which represents the Kuwaiti side of operations.

The document also said staff would take "open-ended" leave if production did not resume by end-August, a step aimed at reducing costs amidst the shutdown, the paper reported.

Wafra representatives could not be immediately reached by Reuters for comment.

The Neutral Zone is the only place in Saudi Arabia and Kuwait where foreign oil firms have equity in fields, which are otherwise owned and operated by state oil companies. Crude output is divided equally between the two countries.

It survived the nationalisation of the Saudi oil industry in the 1970s. Since then, Saudi reserves of 264 billion barrels, about a fifth of the world's proven oil reserves, have been off limits to international oil companies.

Industry sources say Kuwait was angry because it was not consulted when the Chevron concession to operate Wafra was renewed by Riyadh in 2009 until 2039.

But the row goes back further to 2007, when a land dispute between Kuwait and Saudi Arabia led to a delay in Kuwait's plans to build an oil refinery.

Chevron holds a lease on some of the land on Kuwait's side which was earmarked for the new refinery.

The shutdown of Wafra, which has an output capacity of about 220,000 bpd of Arabian Heavy crude, came after the oil output from another jointly operated field, Khafji, was stopped in October to comply with environmental regulations.  - Reuters