Posted on 06/24/2002 3:22:52 PM PDT by swarthyguy
JEDDAH, 24 June — Prince Abdullah, the regent, held crucial talks here yesterday with top executives of ExxonMobil and Royal Dutch Shell to iron out differences over three multibillion-dollar gas projects.
The meetings with ExxonMobil’s Lee Raymond and Shell’s Phil Watts were attended by Prince Saud Al-Faisal, chairman of the ministerial committee for negotiations with oil giants.
“The talks focused on issues related to petroleum industry,” the official Saudi Press Agency said without elaborating. But high-level sources told Arab News that the meetings were positive.
“The talks focused on the points of differences,” the sources said, adding that the negotiations with the oil giants will continue on the basis of yesterday’s discussions.
The sources said the Saudi negotiating team, led by Prince Saud, will hold intensive talks with the oil companies on specific topics “with greater openness to reach quick results.”
Yesterday’s separate meetings were also attended by Petroleum and Mineral Resources Minister Ali Al-Naimi and representatives of ExxonMobil and Royal Dutch Shell in the Kingdom.
The meetings came after two deadlines in December and March passed without agreement between the Kingdom and eight international oil firms which signed a preliminary accord in June 2001 to develop the gas fields.
ExxonMobil has the lead in two projects, while Royal Dutch Shell has the lead in the third project, together requiring initial investments to the tune of $25 billion.
Profitability, risks involved in the investments expected to last 25-30 years, and details about the “rate of return” from power, water desalination and petrochemical plants are at the core of the tough negotiations.
An oil executive said last month that Saudi Arabia and the oil majors were likely to strike interim deals in a few weeks in a bid to avoid a total collapse of the talks.
The government in June 2001 picked eight oil companies, split into three consortia, two led by ExxonMobil and one by Shell, to implement the gas projects.
They were tasked with bringing a gas field on stream and to build facilities that will use their production as feed stock for electricity, water desalination and petrochemical plants.
ExxonMobil is tasked with developing the South Ghawar field, requiring a $15 billion investment, and the Red Sea field, needing $5 billion.
Royal Dutch Shell was selected to lead a consortium to develop the Shaybah field expected to require initial investment of $5 billion. It is also a member in the South Ghawar operation.
BP Amoco and Phillips Petroleum were chosen in the South Ghawar group, TotalFinaElf and Conoco in the Shaybah group, and Occidental and Marathon in the Red Sea group.
Naimi has said that the proposed gas projects would boost the economy, create more jobs for Saudis, and help establish strong partnerships and alliances with specialized international companies.
The three locations selected for the gas projects cover an area of 440,000 square kilometers, making it the world’s largest areas for hydrocarbon investment.
Saudi Arabia, which sits on top of the world’s biggest oil reserves, has proven natural gas reserves of 220 trillion cubic feet (6.6 trillion cubic meters).
Russia baby!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.