RIYADH, 19 May — Saudi Arabia yesterday announced eight international oil companies winners in the race for a stake in its multibillion dollar gas development initiative, the country’s biggest opening to foreign investors in 25 years.
ExxonMobil, Royal DutchShell, British Petroleum and Phillips were given stakes in the biggest of three gas projects on offer, the $15 billion South Ghawar development in the Eastern Province, known as core venture one.
Exxon secured the leading role in core venture two, on the Red Sea coast and northwest of the Kingdom, with Enron and Occidental also winning shares, accoring to Foreign Minister Prince Saud Al-Faisal, who led months-long negotiations with the oil giants.
Shell, TotalFinaElf and Conoco won stakes in core venture three, for development of the Shaybah gas field and the southeast of the Empty Quarter.
Prince Saud said the Supreme Council for Petroleum and Mineral Affairs, chaired by Custodian of the Two Holy Mosques King Fahd, has approved the list of companies selected for the projects.
The awards mark the biggest advance in the Kingdom’s efforts to develop its gas reserves, the world’s fourth largest, since Saudi Arabia unveiled the opening of the energy sector more than two years ago.
International oil companies have been competing furiously since then for a stake in the Kingdom’s gas initiative, estimated to require an initial investment of $25 billion.
Crown Prince Abdullah, deputy premier and commander of the National Guard, initiated the negotiations with the oil giants as he invited the international firms for talks during a visit to the United States.
Leaders for core ventures one and three were not revealed, but Prince Saud said a ministerial committee would announce that decision later. “The companies were selected considering their financial and technical capabilities and expertise as well as their offers that met the Kingdom’s requirements,” the foreign minister said.
Prince Saud said a formal signing of memoranda of understanding would take place in the next few weeks. “These MOUs are aimed at determining the projects, the amounts to be invested, and their time frame,” he added.
He said the final executive agreements would be signed with the selected firms after the determination and designing of the projects. “This will be followed by the projects’ actual implementation.”
Chevron, Italy’s ENI and Marathon — which had been on the Kingdom’s original shortlist of 11 potential investors — were not included in the three awarded projects. Prince Saud said he hoped those three companies would have other opportunities to invest in the Kingdom. “Saudi Arabia has excellent investment climate and it offers incentives to investors,” he added.
Analysts expect state oil giant Saudi Aramco to participate in the gas projects which seek foreign oil companies’ help in developing the Kingdom’s known gas reserves as well as investment in downstream projects fed by gas supplies, such as power and desalination.
Prince Saud commended the efforts of the ministerial committee responsible for negotiating with the international firms for the first projects open to foreign investment since the energy sector was nationalized in 1981.
He said the Saudi team completed the negotiations in a record time. “They designed the ambitious projects that go hand in hand with the Kingdom’s interests and goals and attract the largest foreign investment in the Kingdom’s history,” the prince said.
The negotiating team included Petroleum and Mineral Resources Minister Ali Al-Naimi, Industry and Electricity Minister Hashim Yamani, Finance and National Economy Minister Ibrahim Al-Assaf and Planning Minister Khaled Al-Gosaibi.
The new projects located in the South Ghawar field near Al-Hufuf in the Eastern Province, in the northern Red Sea area and in Shaybah in the Empty Quarter, cover 440,000 square kilometers (176,000 square miles), making it the world’s largest area for hydrocarbon investment.
The investment involves gas exploration and production, and setting up of petrochemical industries and power and water desalination plants. The projects are to be carried out simultaneously by consortia of two to three firms in cooperation with Aramco for up to 30 years.
