RIYADH, 29 September — The Kingdom has raised to 15 percent the rate of return from downstream facilities in three mega gas projects in a bid to break a stalemate with foreign companies, Al-Madinah newspaper quoted an oil executive as saying yesterday.
Al-Madinah said Foreign Minister Prince Saud Al-Faisal, who heads the Kingdom’s negotiating team, made the offer early September in a letter to the lead firms ExxonMobil and Royal Dutch Shell. The oil executive reportedly said the Kingdom has offered a "guaranteed rate of return of between 14.5 to 15.5 percent" from the power generation, water desalination and petrochemical facilities associated with the projects.
"The Kingdom is expecting to get a response from the companies within one month of receiving the offer," said the executive who added that Prince Saud made a "take it or leave it" final offer.
Foreign companies have been demanding a rate of return of 18 to 20 percent as against the Saudi initial offer of 10 to 12 percent. Saudi Arabia has also agreed to increase the quantities of gas available for the foreign firms to make the investment viable, the executive said.
Royal Dutch Petroleum president Jeroen van der Veer said on Sept. 18 the company hoped to break the stalemate in negotiations over the projects within the "coming months".
An industry source said yesterday the two sides have not resolved another problem over who owns the oil-gas condensates which will be produced along with the gas. Riyadh has insisted the condensates belong to Saudi Aramco, while the foreign firms have also made a strong claim.
