RIYADH, 14 June — Saudi negotiators are poised to hold a crucial meeting with the chairmen of ExxonMobil and Royal Dutch Shell to iron out differences over three mega gas projects.
The talks with ExxonMobil’s Lee Raymond and Shell’s Phil Watts will take place on Sunday and Monday, and the negotiators will then report to Prince Abdullah, the regent, an informed Saudi source told Arab News.
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.
Two deadlines in December and March have already passed without agreement between the Kingdom and eight international oil firms which signed a preliminary accord in June 2001 to develop the gas fields.
Profitability, risks involved in the investments expected to last 25-30 years, and details about the “rate of return” from power plants, water desalination and petrochemicals 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.
Saudi Arabia has been pressing for a final agreement with the oil majors, setting the end of June as a final deadline for striking a deal, according to Saudi sources.
But a Western diplomat expected the talks to continue for months.
ExxonMobil won the lion’s share in the initial signing, taking the lead of two consortia 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, and also as a member in ExxonMobil’s 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.
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).
