Worried Prince Abdullah Bin Abdulaziz Meets Exxon And Shell Bosses

Saudi Arabia's Crown Prince Abdullah bin Abdulaziz met the heads of two of the world's top oil firms yesterday in a bid to breathe life into the kingdom's initiative to open up its vast gas fields to foreign investors, oil industry sources said.

A year-long battle over commercial terms has led Riyadh to push the firms, which are being led by ExxonMobil and Royal Dutch/Shell, to finalise deals swiftly or risk facing a new race for its gas.

Crown Prince Abdullah, who hand picked eight multinationals to invest twenty five billion dollars into the kingdom's gas sector, held talks with the chairmen of Exxon and Shell in the Red Sea city of Jeddah.

”The effort continues and we are deeply committed to the initiative's success,” said a source close to the negotiations after yesterday's meetings.

”We have great faith in the crown prince's wisdom and in his interest in finding an equitable outcome.”

Analysts have said it might take intervention by the crown prince himself to rescue this industrial mega project.

”The commitment from the crown prince to make this work is strong,” a Saudi source said. “He is totally aware of where the problems are and will eventually find a way for the project to be realised. The final decision is his.”

Prince Abdullah unveiled the outlines of Saudi Arabia's integrated gas scheme - key to sparking economic growth, luring cash into non-oil sectors and creating jobs - three years ago.

Saudi Foreign Minister Prince Saud al-Faisal, another key supporter of the scheme, and Saudi Oil Minister Ali Al Naimi attended the Crown Prince's separate meetings with Exxon's Lee Raymond and Shell's Phil Watts.

Few had expected yesterday's sessions to produce an immediate compromise in the talks which have broken down over the amount of gas to be turned over to the oil majors keen to return to the Saudi upstream - off-limits since nationalisation in the 1970s.

"There will not be a major breakthrough today, but the lights are changing from red to yellow," said the Saudi source. "All the parties know compromises must be made."

The prime complaint from Western firms is that the kingdom, holder of the world's fourth biggest gas reserves, is short-changing them on gas - especially in the prize package, the fifteen billion dollar South Ghawar development, which is being led by Exxon.

”We hope the Crown Prince sees that we are genuinely concerned about the feasibility of these projects,” said a Western oil executive. And we hope he gives us some gas.”

Saudi Arabia and eight leading oil majors signed preparatory agreements last June for three huge schemes to develop gas and build petrochemical, power and desalination plants.

But a year of fraught deliberations have yielded little more than two missed deadlines for finalising contracts.

“Everyone knows the issues. Quantities of gas are not available in the areas given to the firms,” said an analyst.

Saudi Aramco says it will provide gas, but that means the project is not totally integrated - and from the companies' perspective that is unacceptable.”


&to=http://www2.exxonmobil.com/corporate/' target=_blank>ExxonMobil

&to=http://www2.shell.com/home/Framework' target=_blank>SHELL

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