Saudi Arabia has given the greenlight to a $2 billion pipeline to supply Qatari natural gas to Kuwait through its waters despite a diplomatic spat between Riyadh and Doha, a Qatari oil ministry official said yesterday.

"Saudi Arabia has told us that they have no objection to our going ahead with the project," said Nasser Jaidah, director of oil and gas explorations and new ventures at the ministry.

"We will soon reactivate the process of converting the term sheet into a formal SPA (sales and purchase agreement) and push the project forward," he said.

The project needed a "no objection" signal from Saudi Arabia because a major chunk of the 590 kilometre gas pipeline from Qatar's North Field to Mina Al Ahmadi port in Kuwait is to pass through Saudi territorial water.

A year ago, Qatar and Kuwait signed a commercial term sheet reaching broad agreement on price, volume, route and construction of the pipeline. They agreed to convert the term sheet into a binding SPA by June 2001.

But the deal was delayed as Saudis sat on Qatar's request to allow them to build the pipeline. The gas project calls for building a 36-inch diameter pipeline to supply the gas from North Field for 25 years from end-2005.