Negotiators try to bridge the gap over Saudi gas projects

Feb 12, 2002 01:00 AM

Saudi Arabia and international oil majors are working hard to "bridge the gap" in negotiations over multi-billion-dollar gas projects, but they should be signed on time, Oil Minister Ali al-Naimi said. "Most of the information published (about a dispute) is baseless. But in the negotiations, there are positions, not differences, and negotiators are trying to bridge the gap," Naimi told.
"Negotiations are progressing. We are looking forward to signing the executive agreement in the first week of March," he said about the new deadline set by the kingdom and eight foreign oil firms to sign the final deal. The oil-rich kingdom signed a preliminary agreement in June with eight foreign firms to develop three fields requiring investments of more than $ 20 bn in what is known as the "Gas Initiative".

A final agreement was due to be signed by mid-December, but the two sides decided to delay until early March after having achieved "concrete and substantial progress", according to the Saudi oil ministry. Western oil executives and experts said that profitability, high taxes and disappointment at the size of the gas reserves on offer were the main bones of contention for negotiators.
"Undoubtedly, the companies have their demands, and the state has its demands. We are trying to sort out these demands into an agreement. I don't call this a dispute," Naimi said. He said the "executive plan" will be followed with "lots of details to be spread over a long time."

Naimi said the kingdom, which has the fourth largest proven gas reserves in the world, is planning a second phase of gas projects, which would be "more substantial" than the first. Exxon Mobil of the United States won the lion's share in the initial signing, taking the lead of two consortia tasked with developing the South Ghawar and the Red Sea fields.
Shell was selected to lead a consortium to develop the Shaybah field, and also as a member in ExxonMobil's South Ghawar operation. BP and Phillips Petroleum were chosen in the South Ghawar group, TotalFinaElf and Conoco in the Shaybah group, and Occidental and Marathon in the Red Sea group.

Source: Energy24
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