YANBU, 18 April — The Kingdom has invited “serious foreign investors” into partnerships in mega gas and oil projects with the aim of boosting the national economy and creating more jobs, Minister of Petroleum and Mineral Resources Ali Al-Naimi said here yesterday.
The main goal is “to establish strong partnerships and alliances with specialized international companies, and attract foreign investments,” the minister told a three-day symposium which ends in this Red Sea industrial city today.
Such partnerships should “build comprehensive industries, starting with gas exploration and extraction ... and ending with vital projects including power generation, water desalination and petrochemicals,” Naimi said.
The first forum on investing in the development of the Madinah region was a showcase of potential opportunities in oil, gas, petrochemicals, mining, tourism, agriculture and transportation worth several billion dollars.
Madinah Governor Prince Muqrin opened the meeting on Monday by inviting participants “to see the promising investment opportunities available in the region,” and vowed to cut red tape.
The event organized by the Royal Commission for Jubail and Yanbu was attended among others by Prince Abdullah ibn Faisal ibn Turki, governor of General Investment Authority, and Prince Saud ibn Abdullah, governor of the Royal Commission of Jubail and Yanbu.
Naimi said investment in the gas projects will be accompanied by major expansion and new ventures in the natural gas network. The national oil company, Saudi Aramco, has been working to boost the network’s capacity from the current 3.5 billion cubic feet per day to seven billion daily in 2004, he said. This will boost gas supplies for industrial use to Riyadh, eastern and western regions of the country.
Focusing on the prospects of investment in the Madinah Province, the minister said the region, which is home to two major oil refineries, “will be supplied with natural gas from the Eastern Province within two years.”
Work has been under way for the past one year to deliver gas from Shedgum, one of the gas gathering sites in the east, to Yanbu via a 1,200-km pipeline. Upon its completion in mid-2003, it will carry about 300 million cubic feet of gas per day.
Availability of dry gas will release a large quantity of ethane, which can be utilized as a feedstock for petrochemical factories and can meet the fuel needs of new industrial projects.
Reviewing the Kingdom’s natural gas industry, he referred to the present and future role of gas and highlighted the historical development of this industry in the Kingdom. The development, he said, had passed through four main phases and was now in its fifth phase.
The first phase started with oil production in 1938 and lasted through 1975. The fifth phase was launched when the Kingdom invited foreign investment in gas exploration, production and processing, as well as linking these initial upstream resources with downstream processes.
Naimi recalled that the Kingdom has offered three mega gas projects to foreign and local investors in the south Ghawhar field, Shaib-Kadan area in the south and the northern Red Sea. The three locations cover an area of 440,000 square kilometers, making it the world’s largest areas for hydrocarbon investment, he said.
Foreign oil executives based in the Kingdom attending the forum said they were expecting a decision on awarding the projects within “a few weeks”, but Naimi said it was still in the preliminary stages. “Nothing has been done so far. We are still in the preliminary stages of assessing the projects,” he said.
“We want to see strategic partnerships between foreign and Saudi investors and the state to achieve our goals of economic prosperity,” the minister said. “No doubt, the challenges are immense and diverse, the biggest of all being the sustained economic development at a rate that exceeds that of population growth and establishment of a sturdy industrial base capable of competition at the international level,” he added.
The Kingdom’s proven natural gas reserves grew by seven trillion cubic feet in the past decade to 220 trillion, the fourth largest in the world.
But Abdullah Juma, president and CEO of Saudi Aramco, said initial assessments indicate that vast reserves of gas remain to be discovered in many parts of the Kingdom. “These findings are supported by public-domain information from respected international organizations. The assessments suggest that Saudi Arabia holds one of the largest and most accessible gas reserves in the world,” he told the forum. “The massive quantities of yet-to-be-discovered gas offer investors the promise of major investment opportunities,” he added.
The average consumption of gas per day in the Kingdom is about 3.4 billion cubic feet. The per capita daily consumption exceeds that of industrial countries such as Britain and Germany.
Juma said Aramco’s long-term vision for hydrocarbon and related businesses offers wide-ranging investment opportunities for both domestic and international investors. He outlined six areas — gas and associated products, petrochemicals, refining, special utilities, engineering and construction of petrochemical facilities and oil and gas reserves.
