|
Saudi Arabia signs landmark agreement with majors Three natural gas fields to be developed; ExxonMobil, Royal Dutch/Shell to manage fields; BP, TotalFinaElf, Conoco, Phillips, Occidental, Enron, Marathon also participating by The Associated Press
Saudi Arabia signed agreements with nine oil international oil companies June 2, a move that marks the first major foreign investment in its energy sector since it nationalized the industry in 1975.
The deal, worth at least $25 billion, involves the development of three natural gas fields in the kingdom and a number of related power plants, transmission pipelines and water desalinization projects.
Irving, Texas-based Exxon Mobil Corp., the world’s largest publicly traded oil company, is the lead manager on two of the projects, including the $12 billion to $16 billion Ghawar Core Venture 1 project. It also will lead the Red Sea Coast Core Venture 2 project.
Royal Dutch/Shell was chosen to lead the Shaybah Core Venture 3 project. The last two projects have a value of $7 billion to $10 billion each, Prince Saud al-Faisal told reporters.
The Western companies will help Saudi Arabia convert its utilities from oil-burning to natural gas, which would free up more of the kingdom’s crude oil for export.
The other companies selected were BP, TotalFinaElf SA, Conoco Inc., Phillips Petroleum Co., Occidental Petroleum Corp., Enron Corp. and Marathon. Expectations aggressive Harry Longwell, director and senior vice president at Exxon Mobil, said the financial terms of the deal are still being discussed. But he said his company is ready to begin the work when the final contracts are signed.
“The Saudis’ expectations are extremely aggressive,” he told The Associated Press. “It’s a very tight schedule and in recognition of that, the ability to get this done is one of the key reasons we were chosen to lead two of these ventures. We already have a senior management team in place and are ready to go to work immediately.”
Saudi Oil Minister Ali al-Naimi said the companies are expected to profit on returns from the exploration and development of gas fields with more than 15 percent of the investment cost.
Saudi Arabia’s state-owned energy company, Saudi Aramco, will be an equity owner in the projects.
Al-Faisal said in if the companies discover oil, they will be compensated and the fields will be repossessed by Saudi Arabia. Oil fields nationalized in 1975 Saudi Arabia nationalized its oil fields in 1975 after tension caused by the Arab oil embargo against the West that began two years earlier, and closed its energy exploration and production sectors to foreign investment.
Although locked out of the production of energy, Exxon Mobil has $5 billion in refining and petrochemical joint ventures in the country and is the largest foreign purchaser of crude oil and other hydrocarbons from Saudi Aramco.
| 