ExxonMobil has won the coveted
lead role in the $15 billion South Ghawar project, the prize gem in
the Kingdom’s landmark gas development opening, the Saudi Press
Agency reported yesterday. The US energy giant edged out stiff
competition from rival supermajor Royal DutchShell, which was awarded
the leadership role in the $5 billion Shaybah gas development project
or Core Venture Three.
SPA quoted Foreign
Minister Prince Saud Al-Faisal as saying that a ministerial committee
that supervised negotiations with foreign oil firms recommended that
the two companies be assigned the leading roles in the two projects.
committee based its recommendations on what the two companies enjoy in
terms of expertise and competence and due to their technical and
financial resources which would enable them to carry out the roles
assigned to them in the best way possible,” Prince Saud, who heads
the panel, said.
He said the
committee would pass on its recommendations to the Supreme Council for
Petroleum and Mineral Affairs to consider them before signing
preparatory agreements with the world majors.
Exxon had already
landed the lead position in the third gas package on offer by Riyadh,
the $5 billion development of the Red Sea coast. Both Exxon and Shell
already have significant foreign investments in the Kingdom and
feature as top customers of Saudi oil, analysts said.
The Kingdom on May
18 announced that eight major oil companies would get stakes in the
three gas projects, worth a combined $25 billion in initial
investment. Chief executives from the companies and Saudi officials
are due to sign preparatory agreements today in Jeddah.
Exxon, as leader of
the South Ghawar development — or Core Venture One — is to get a
35 percent stake, while Shell and BP are to get 25 percent each and
Phillips 15 percent, industry sources said.
In Shaybah, or Core
Venture Three, Shell will be granted a 40 percent share, with Conoco
and TotalFinaElf getting 30 percent each, according to industry
“There is more
than enough in these projects for everyone to have a prominent
role,” a Western industry source said. The deals mark the reopening
of Saudi Arabia’s upstream gas industry 25 years after
nationalization. The Kingdom holds the world’s fourth biggest gas
reserves. Oil development remain solely in the hands of state-owned
Oil executives said
many details are still to be ironed out in the gas opening, unveiled
more than two years ago. Fiscal and regulatory frameworks are to be
worked out during the second half of the year — in time to meet a
yearend target for signing final contracts, industry sources said.
When ground is broken, it will mark the return of ExxonMobil to the
Kingdom’s upstream industry.