Saudi awards multi-billion dollar gas projects

Published May 20th, 2001 - 02:00 GMT

DUBAI, (Reuters) - Saudi Arabia on Friday declared eight leading oil companies winners in the race for a stake in its multi-billion dollar gas development initiative, the kingdom's biggest opening to foreign investors for 25 years.  


ExxonMobil , Royal Dutch/Shell , BP 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, the official Saudi Press Agency (SPA) announced on Friday, May 18. 


Exxon secured the leading role in core venture two, on the Red Sea coast, with Enron and Occidental also winning shares, SPA said. 


Shell, TotalFinaElf and Conoco won stakes in core venture three, for development of Shaybah in the empty quarter of southeast Saudi Arabia. 


The awards mark the biggest advance in the kingdom's efforts to develop its gas reserves, the world's fourth largest, since Riyadh unveiled the energy opening more than two years ago. 


Big oil has been competing furiously since then for a stake in the kingdom's so-called gas initiative, estimated to require initial investment of $25 billion. 


Leaders for core ventures one and three were not revealed, but SPA quoted Saudi Foreign Minister Saud al-Faisal as saying a ministerial committee will announce that decision later. 


Industry sources expect ExxonMobil and Shell, respectively, to win the biggest roles in those projects. 


"The least surprising element would be having two oil supergiants running the gas projects," a regional source said. 


A formal signing of memoranda of understanding (MOUs) will take place in the next few weeks, Prince Saud said. 


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. 


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.  


By Peg Mackey 


© 2001 Mena Report (

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