JEDDAH, 7 May 2003 — Saudi Arabia has cleared major obstacles to signing the final agreements with international oil majors for two mega gas projects, agreeing terms on associated power plants, the chief Saudi negotiator said in the capital yesterday.
“The committee conducting the negotiations has completed its mission in reaching agreements on electricity, water and petrochemical plants,” said Foreign Minister Prince Saud Al-Faisal.
“What remains now is technical issues which have been referred to the petroleum minister so that the negotiations can be concluded,” the prince said.
The deal, reportedly worth over $25 billion, has been a long time in the making, with negotiations said to be troubled as recently as last month when ExxonMobil Corp. denied that it had pulled out of the multibillion-dollar gas initiative.
“We will continue to have discussions with the Saudi government on the natural gas initiative,” an ExxonMobil spokesman told AFP at the time.
Also last month, ExxonMobil Chairman and Chief Executive Officer Lee Raymond was quoted by Forbes magazine as saying that the project was “not competitive” and the company had abandoned it.
“Mr. Raymond’s (statement) was taken out of context,” added the ExxonMobil spokesman. ExxonMobil has secured the lead role in two out of three projects in the natural gas initiative.
Crown Prince Abdullah, deputy premier and commander of the National Guard, last June met with officials from the world’s top oil firms to discuss obstacles hindering the lucrative gas deal.
Prince Abdullah met separately with Phillip Watts, the chairman of the Royal Dutch/Shell Group of Companies, and Lee Raymond.
Saudi Arabia approved offers from Shell, ExxonMobil and six other companies two years ago to work three large Saudi gas fields.
However, disagreements over various issues — including the level of revenues for the companies — delayed the signing of final deals.
The agreements were reached on the first and third projects, Core Venture 1 (CV1) and Core Venture 3 (CV3), which require investments of about $20 billion.
ExxonMobil has the lead role in CV1 while Royal Dutch/Shell has the lead in CV3. The second project, Core Venture 2 (CV2) was shelved to “reassess its economic situation”, according to Prince Saud.
The projects also include water desalination, power and petrochemical plants.
Saudi Arabia nationalized its oil fields in 1975 and closed its energy exploration and production sectors to foreign investment. Although locked out of the production of energy, ExxonMobil has $5 billion in refining and petrochemical joint ventures here, and is the largest foreign purchaser of crude oil and other hydrocarbons from Saudi Aramco.
