RIYADH, 16 November 2003 — Petroleum and Mineral Resources Minister Ali Al-Naimi yesterday signed a historic agreement with oil giants Royal Dutch Shell and TotalFinaElf, and said the pact reflected the strength of the Saudi economy.
“It is an indicator of confidence in the strength and firmness of the Saudi economy,” the minister said.
Al-Naimi said the agreement for gas exploration and production in the Rub Al-Khali or Empty Quarter marked “a significant advance in the strategy to promote gas investment and achieve a number of vital national goals.”
The deal, which has been approved by the Cabinet and the Shoura Council, involves the creation of a new company, which will have a 25-year concession for gas exploration and production from an area of about 210,000 sq. km in the Empty Quarter.
Shell will control a 40 percent stake, with TotalFinaElf and state-run Saudi Aramco controlling 30 percent each, the minister said.
Al-Naimi signed the deal with Total Chairman and CEO Thierry Desmarest and Sir Phillip Watts, chairman of the committee of managing directors of Royal Dutch Shell.
“This evening, we witnessed the signing of the Kingdom’s first natural gas investment agreement, which is being implemented... to encourage international oil companies to invest in the Kingdom’s gas sector,” the minister said.
Al-Naimi said gas consumption in the Kingdom was set to increase over the next five years due as economic activity grows, especially in the petrochemicals, power generation and water desalination sectors.
“The project being signed today is only the beginning of a series of investment projects designed to develop the nation’s precious natural gas resources,” he said.
Al-Naimi disclosed that his ministry had invited international oil giants to present tenders for other promising areas in the north of the Rub Al-Khali. “These bids will be assessed on a competitive basis and with the utmost transparency,” he said, adding the result of the tender would be announced in the coming months.
The Kingdom had earlier announced plans to invite an international tender next year for three new gas exploration and production projects. The three separate projects cover areas of 29,900 sq. km, 38,800 sq. km and 51,400 sq. km in various parts of the Kingdom.
“Today’s agreement is an important breakthrough as it heralds the first time after the creation of Saudi Aramco that foreign oil companies have gained access to gas resources in Saudi Arabia,” said Shell President Jeroen van der Veer.
Saudi Arabia, which sits atop the world’s biggest oil reserves, has proven natural gas reserves of 224 trillion cubic feet (6.6 trillion cubic meters). Current gas production in the Kingdom is around six billion cubic feet daily but there are plans to boost it to about 10 billion cubic feet per day by 2010.
