JEDDAH, 27 January 2004 — Russian oil and gas giant Lukoil yesterday signed a contract with Saudi Arabia for the exploration and production of gas in the Rub Al-Khali, or Empty Quarter, Petroleum and Mineral Resources Minister Ali Al-Naimi announced. “The Russian firm Lukoil has won and signed a gas exploration and production contract for a 30,000 square km (11,600 square mile) area in the Empty Quarter,” the Saudi Press Agency quoted the minister as saying.
No specific information about the deal was given but Naimi said on Jan. 18 that international firms would bid for gas exploration and production in three regions of the Kingdom with a total area of 120,000 square km. Lukoil, which was selected through a bidding process, will own 80 percent of a new company being set up for the project while state-owned oil giant Saudi Aramco will own the remaining 20 percent. According to an Aramco official, it is the first venture between the Saudi oil company and a Russian one.
The deal comes after a historic visit by Crown Prince Abdullah, deputy premier and commander of the National Guard, to Moscow in early September. His visit saw the two countries signing a five-year oil and natural gas cooperation accord which Russian officials at the time said could lead to deals worth up to $25 billion.
Naimi said international companies would present their offers for the remaining two regions today and tomorrow. “The result of bidding for all the regions will be announced on Jan. 28,” he added. Some 27 American, European, Chinese, Indian and Japanese companies are bidding for new gas projects in the two regions.
In November, Saudi Arabia signed a multibillion-dollar deal with a consortium led by Royal Dutch Shell and Total for gas exploration and production in the south of the Kingdom. The 40-year concession covers an area of 210,000 sq. km.
An official at the Ministry of Petroleum put the value of the deal at $4 billion in direct investment.
