RIYADH, 27 June — The multibillion-dollar gas development initiative will provide radical solutions to the unemployment problem in the Kingdom, a senior oil industry executive said as the new Saudi negotiating team is set to hold high-level talks next week with eight major oil companies chosen for carrying out the project.
John Lindemood, Phillips Petroleum International’s president for the Middle East and North Africa, told Arab News in an interview that initial investments by the eight multinational companies participating in the project would involve $25 billion while indirect investment would be many times that sum.
Lindemood pointed out that under similar conditions in other countries every $1 in direct investment had invited $5 to $8 in indirect investments in support services and other related fields.
Phillips Petroleum will participate in the development of South Ghawar field north of Empty Quarter alongside Royal DutchShell, BP and ExxonMobil. Lindemood refused to disclose financing sources of his company, but said it would pump over $10 billion in the first five years in operation.
“The company will try to tackle the unemployment question from three sides: First, by providing employment opportunities directly in the gas and allied projects such as water desalination, power generation and petrochemical projects; secondly, by helping to set up medium and small companies to carry out service contracts and subsidiary projects which are expected to become large sources of employment opportunities; and thirdly, by creating a congenial atmosphere for industrial development to make the country one of the most attractive investment hubs for foreign businessmen.”
The companies will need a skilled workforce and that calls for starting top quality training centers for Saudi youths, he said, adding that the companies would be competing to attract skilled local manpower. “At the appropriate time we will start negotiations with the local banks and financiers to form a bloc. Thus Saudi Arabia will become our base for future expansions in the region. We will also explore future projects such as power generation and water desalination with Saudi participation,” he said.
As Minister of Petroleum and Mineral Resources Ali Al-Naimi said the gas output initially would be for domestic consumption.
The negotiations between the giant corporations and the Saudi government did not involve exports, Lindemood said. This was because domestic demand is likely to increase soon as the industrial sector is projected to register an annual growth rate of 9.6 percent, he added.
Meanwhile, senior executives from ExxonMobil, Royal DutchShell, BP, Phillips, Occidental, Marathon, Conoco and TotalFinaElf are due for the July 2-3 talks in Riyadh and Dhahran, industry sources said yesterday.
The long, heated race for a stake in the Kingdom’s upstream gas sector ended on June 3, when the companies signed preparatory agreements for three huge gas projects requiring total initial investment of some $25 billion.
Their next big hurdle is to agree between themselves on how to work internally. The Kingdom must approve the proposals, which were to be hammered out by early July, sources said. But that deadline may not be met as the companies attempt to carve out the best possible position for themselves within the three consortia, industry sources said.
There is also some concern about potential overlap between the components of the three projects, the sources added. The new Saudi negotiating team, led by Minister of Petroleum and Mineral Resources Ali Al-Naimi, includes Khaled Al-Falih of Saudi Aramco, Fareed Zedan of the Ministry of Industry and Electricity, Mansour Al-Iyyaf of the Oil Ministry, Saleh Al-Muhanna of the Ministry of Finance, Omar Al-Ghamdi of the water authority and Ghazi Al-Geelani of the Ministry of Planning.
