The Kuwaiti Cabinet has given the green light to its plan to map out new contracts that will allow Tokyo-based Arabian Oil Co. to continue operations in the country's Khafji oil field, Arabian Oil said Monday.

The plan was endorsed at a Cabinet meeting held Sunday, following approval earlier in the month from the Supreme Petroleum Council, which controls Kuwait's oil and gas sectors, Japan's biggest oil production company said.

Following the latest go-ahead, Arabian Oil and the Kuwaiti government will soon begin negotiations on transitional measures and the transfer of operational liabilities, said the firm, which is owned 10.9 percent each by the Saudi Arabian government and Kuwait Petroleum.

With its current concessions for drilling oil deposits to expire in January 2003, Arabian Oil reached a basic accord with the Kuwaiti government in September to continue under three new contracts.

A technical service contract to provide paid technical advice to a new company likely to be established by Kuwait will allow the firm's continued involvement in tapping the field, while a long-term oil-purchasing contract is designed to ensure a stable supply. The third contract is a financial commitment.

The company lost concessions to the Saudi Arabian portion of the same oil field in February 2000.