JEDDAH, 22 June 2003 — According to the Middle East Economic Survey (MEES), European oil giant Royal Dutch/Shell is continuing talks with the Kingdom for a historic opening of its natural gas sector despite US oil giant ExxonMobil having dropped out of a similar deal.
The industry newsletter said that Shell, whose $5 billion Shaybah project originally included both gas exploration and building industries to use the fuel, was now focused on gas exploration only.
“Shell has demonstrated flexibility in negotiations and a genuine willingness to arrive at a deal,” the MEES newsletter reported in its June 23 issue.
MEES said the Ministry of Petroleum and Mineral Resources was now considering a competitive bidding tender for the remaining exploration areas in smaller, focused packages. “If this route were to be taken, Riyadh would hope to award packages by the end of the year,” MEES reported.
The industrial elements of the three original projects, under discussion since 1998 and including power stations, water desalination and petrochemical plants, would almost certainly be put to international tender, the newsletter said.
A Shell spokeswoman in London said the company was bound by a confidentiality agreement regarding the talks.
“Shell remains committed to the vision of these projects,” she added.
More than two years of talks ended in the collapse of two of the three original projects recently, as the two sides were unable to agree on reserves and rates of return. The projects were intended to open the Kingdom’s hydrocarbons industry to foreign investors for the first time since nationalization in the 1970s.
ExxonMobil were told that effective June 15 the proposed $15 billion scheme to develop gas reserves in the South Ghawar field would not be going ahead.
Two $5 billion projects involving gas production for petrochemical, power and water desalination plants are also now thought unlikely to proceed.
