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ExxonMobil tipped to secure top role in gas deals
Riyadh, 16th Apr 2001

   US supermajor ExxonMobil may soon secure the coveted lead role in two projects on offer in Saudi Arabia’s multibillion dollar natural gas opening, industry sources said yesterday.

“Things are certainly shaping up that way, but it is not a done deal yet,” one source said.

Daniel Nelson, chairman and senior executive of ExxonMobil Saudi Arabia Inc., said the projects would pump a total of $25 billion into the national economy and provide new investment opportunities to Saudi businessmen who will have a basic role to play.

Experience in other countries shows that for each dollar invested in the gas sector five to eight dollars will be invested in support industries.

Nelson told Arab News that ExxonMobil, which expects a leadership role in one or more projects, worked earnestly during the negotiation phase. “The company has made full preparations to meet its commitments immediately” once a deal is signed, he said.

The world’s top energy firms have been angling for a stake in three so-called “core ventures” on offer under the Saudi gas initiative — the Kingdom’s biggest energy opening since nationalization in 1975.

The results will be revealed in the next few weeks when the Saudi ministerial committee is due to present its choices to the Supreme Council for Petroleum and Mineral Affairs, the ultimate decision maker.

Companies would then sign memoranda of understanding, the biggest step forward since Riyadh unveiled its energy investment opening to oil majors more than two years ago.     Industry sources said ExxonMobil looks well-positioned for a top slot in the largest project worth an estimated $15 billion — core venture 1 (South Ghawar area development) — as well as in core venture 2 (Red Sea area development). Anglo-Dutch oil giant Royal Dutch/Shell is meanwhile tipped for the number one slot in core venture 3 (Shaybah area development), industry sources said.

The race to head the consortia has been intense as the lead company is expected to operate the project and snare the biggest stake, regional analysts said.

Nelson said the projects would go a long way in solving the unemployment problem in the country. He explained that a large number of jobs would be created directly in the gas projects. Besides, subsidiary industries such as water desalination, power generation and petrochemical ventures as well as support projects will generate jobs in large numbers.

Nelson said it was a historic opportunity for the Kingdom to attract huge investments in all economic sectors.

Both ExxonMobil and Royal Dutch/Shell have a history of involvement in the Kingdom, the world’s biggest holder of oil reserves and fifth largest gas reserves.

ExxonMobil is the largest foreign direct investor in Saudi Arabia and the single biggest buyer of the Kingdom’s oil.     Royal Dutch/Shell is the second biggest lifter of Saudi crude oil and also has investment in the Kingdom.

The following companies have been short-listed for the gas projects, designed to help develop existing gas reserves and encourage investment in downstream projects fed by gas supplies, such as power and desalination: Core Venture 1 (South Ghawar): ExxonMobil, Royal Dutch/Shell, BP, Chevron, TotalFinaElf and ENI.

Core Venture 2 (Red Sea): Enron/Oxy, ExxonMobil, TotalFinaElf, Marathon, Royal Dutch/Shell and Conoco.     Core Venture 3 (Shaybah): Conoco, TotalFinaElf, Phillips, Enron/Oxy, ExxonMobil, Royal Dutch/Shell and Marathon.     Although Saudi Arabia has lured the world’s biggest energy firms by opening up the upstream gas sector, investment in its prized oil sector remains off limits.

Source: Arab News©

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16 April 2001 07:26:08 PM

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