RIYADH, 13 February- Saudi Arabia and international oil majors are working hard to "bridge the gap" in negotiations over multi-billion-dollar gas projects, but they should be signed on time, Petroleum and Mineral Resources Minister Ali Al-Naimi said yesterday.
"Most of the information published (about a dispute) is baseless. But in the negotiations, there are positions, not differences, and negotiators are trying to bridge the gap," Naimi told a press conference. "Negotiations are progressing. We are looking forward to signing the executive agreement in the first week of March," the new deadline set by the Kingdom and eight foreign oil firms to sign the final deal.
The Kingdom signed a preliminary agreement in June with eight foreign firms to develop three gas fields requiring investments of more than $20 billion in what is known as the "gas initiative".
A final agreement was due to be signed by mid-December, but the two sides decided to delay until early March after negotiators "having achieved concrete and substantial progress".
Western oil executives and experts said last week that profitability, high taxes and disappointment at the size of the gas reserves on offer were the main bones of contention.
"Undoubtedly, the companies have their demands, and the state has its demands. We are trying to sort out these demands into an agreement. I don't call this a dispute," Naimi said.
He said the "executive plan" will be followed with "lots of details to be spread over a long time."
Naimi said the Kingdom, which has the fourth largest proven gas reserves in the world, is planning a second phase of gas projects, which would be "more substantial" than the first. He gave no details.
Meanwhile, a leading energy executive has said that the basic objective of the Saudi gas initiative was to make available cheap fuel in the country's main industrial centers. This, he said, will expedite diversification and expansion of industries generating plenty of job opportunities.
Addressing a seminar on industrial development in the Kingdom, Abdullah Juma, president and CEO of the Saudi Aramco, said the unprecedented success achieved in the oil sector during the 20-year reign of Custodian of the Two Holy Mosques King Fahd had contributed to progress in all walks of life. The seminar was organized by King Fahd University of Petroleum and Minerals in Dhahran as part of its celebrations to mark the 20th anniversary of King Fahd's reign.
Juma said the rapidly expanding gas network has now become the backbone of industrial development in the Kingdom. It has been described as the largest gas network in the world.
Aramco started supplying gas to power plants in Riyadh last May. The supply is expected to extend to Yanbu, one of the main industrial centers on the western coast, by early next year.
Discussing the exploration of gas and its role in promoting industrial growth, Juma said the company produces 5.4 billion cubic feet of gas, 400 million cubic feet of ethane and 700,000 barrels of liquefied natural gas daily. The projects currently under way will enhance the daily output to 7 billion cubic feet of gas and 600 million cubic feet of ethane.
"The planned expansion in the gas sector reflects the true desire of Aramco to be a dependable partner in the industrial development of the Kingdom," Juma said.
He added that gas would replace oil as fuel in power generation and water desalination as much as possible. This will save a huge quantity of oil for more profitable use.
