RIYADH, 25 December 2002— The Kingdom yesterday denied reports it had advised Iraqi President Saddam Hussein to step down in order to avert a US-led war and said it would not take part in military action against Baghdad.

“Contacts with Iraq by Saudi Arabia and all Arab countries have continued. We have not asked the Iraqi leadership to step down, maybe other Arab states did,” Foreign Minister Prince Saud Al-Faisal told a press conference.

But the Kingdom’s chief diplomat declined to answer a question on whether Riyadh would grant Saddam political asylum if he quit power.

Prince Saud renewed the Kingdom’s rejection of a threatened US war against neighboring Iraq, saying it would not take part in any military action. “If the UN Security Council sanctions war against Iraq, this requires cooperation by all countries ... But this does not mean all countries must take part in military action. Obviously, we will not take part in military actions,” Prince Saud insisted.

He said that allowing US and British aircraft operating from Prince Sultan Air Base to enforce a “no-fly” zone over southern Iraq “does not mean the Kingdom will attack Iraq or will allow striking Iraq from its territories.”

“There has been no change to the duties of foreign troops in the Kingdom since after the end of the 1991 Gulf war,” he said.

Prince Saud said Riyadh was pleased with Iraq’s cooperation with UN weapons inspectors and “we hope their report would help spare Iraq any military action.”

He said it was up to the UN Security Council to decide if the Iraqi declaration on its weapons programs constituted a possibly war-triggering material breach of Resolution 1441.

“We assume that any declaration of Iraq having committed a material breach should come from the UN Security Council,” since the matter has been referred to the United Nations, he said.

Prince Saud said the Kingdom and the US enjoy excellent relations but if the US wants to impose unacceptable conditions the situation may change. It will also affect stability in the region. Replying to a question about anti-Saudi campaign in the US, the prince said the American media was responsible for the propaganda and not the US administration.

Prince Saud said the Kingdom hopes to close within the next two months a deal with foreign oil majors over multibillion dollar gas projects stalled for more than a year.

“We have received a generally positive response from the third consortium,” which is led by Royal Dutch Shell, and includes TotalFinaElf and Conoco, to develop the Shaybah fields, Prince Saud said.

“Only one point remains to be sorted out. We hope this point will be dealt with and, if this happens, we will sign the deal,” said the prince, who heads the ministerial committee conducting talks with the foreign oil companies.

“There are indications that the response of the first consortium will be positive. We expect to reach a clear result within the next two months,” he told a press conference.

The first and second consortia to develop the South Ghawar and the Red Sea fields are led by ExxonMobil.

BP Amoco and Phillips Petroleum were chosen in the South Ghawar and Occidental and Marathon in the Red Sea group.

The Saudi government made a final offer to the companies in early September following a series of negotiations and a meeting between Crown Prince Abdullah, deputy premier and commander of the National Guard, and the CEOs of ExxonMobil and Royal Dutch Shell.

The firms signed preliminary agreements in June 2001 for the projects expected to require $25 billion of investments.

But talks to close a final deal have been stalled with differences on details of the commercial terms.

The projects also include water desalination, power and petrochemical plants.

Prince Saud said the projects are “huge, unprecedented in the region and highly complex,” justifying the long time the talks have taken so far.

He reiterated the government’s determination that “Riyadh will carry out these projects with these companies or others. There is no question about that.”

The projects, known as the “Saudi gas initiative,” mark the first opening in the Saudi energy sector since it was nationalized in 1981.