RIYADH, 15 July — Fresh talks between the Saudi negotiating team and international oil giants began here yesterday with a view to reaching final agreements on three major gas projects with a combined investment of $25 billion.
Sources close to the Saudi team told Arab News that they have begun the talks with top executives of Royal Dutch Shell, which has been selected to lead a consortium to develop the Shaybah field, the largest of the three.
"The talks with Shell will continue today. It will be followed by talks with representatives of ExxonMobil tomorrow," the sources said, adding that the meetings were aimed at resolving outstanding differences.The new round of talks follows a crucial meeting between Prince Abdullah, the regent, and ExxonMobil’s Lee Raymond and Shell’s Phil Watts in Jeddah last month to iron out differences on the three projects. "The Saudi negotiating team is seeking to reach final agreements with the international oil companies by the end of this month," the sources said, and commended Prince Abdullah’s efforts to revive the talks. The sources denied suggestions that state-owned Saudi Aramco was leading a campaign against foreign oil giants as the regions allocated for gas investments come under Aramco’s monopoly.
The two sides differ on issues such as profitability, risks involved in the investments expected to last 25-30 years, and details about the rate of return from power, desalination and petrochemical plants.
The foreign oil companies have complained that they have been allocated areas that do not contain much gas reserves. But Aramco said in a single region allocated for investment there is a reserve of 30 trillion cubic meters of gas.
Saudi Arabia picked eight oil companies in June last year to carry out the multibillion dollar gas initiative. Split into three consortiums — two led by ExxonMobil and one by Shell— they are tasked with bringing a gas field on stream and to build facilities that will use their production as feedstock 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 picked to develop Shaybah which requires $5 billion.
The South Ghawar project, located north of the Empty Quarter, includes construction of two electricity and desalination plants as well as two petrochemical plants in the Eastern Province and Western Province.
