Crown Prince Abdullah is expected to base his own proposals at the meeting on two recommendations made by Prince Saud al-Faisal, head of the specialised committee for foreign investment of the Supreme Petroleum Council. A meeting of the committee, which includes Ali Naimi, Finance & National Economy Minister Ibrahim al-Assaf, Industry & Electricity Minister Hashim Yamani and Planning Minister Khaled al-Gosaibi, had been scheduled for 8 June, but was delayed due to Prince Saud al-Faisal’s visit to the US. Western oil executives say the meeting was expected to involve key talks over the future of the initiative.
Raymond and Watts are negotiating on behalf of the core venture consortia that they lead. ExxonMobil is the leading shareholder in core ventures 1 and 2, while Shell is leading 3. While there are specific issues to be dealt with separately for each core venture, the fundamental point of difference is a disagreement over the internal rate of return (IRR) to be made by the consortia. Differences over the pricing of the gas, the extent of acreage available and the difficulty of extracting the gas are reported to be significant sticking points in negotiating the IRR.
The kingdom’s negotiating team is led by Saudi Aramcopresident Abdullah Jumaa and comprises experts on petrochemicals, power and water, in addition to Aramco officials focusing on the upstream elements. That team reports to the Supreme Petroleum Council, which is chaired by Crown Prince Abdullah and includes Prince Saud al-Faisal. Sources close to the negotiations say the talks ‘are being described as crunch by a lot of people’.
Core venture 2, which has faced the most difficulty in negotiations due to upstream concerns, is understood to be still on the table, although sources say it is ‘unlikely’ to go ahead. For the other ventures, there are time constraints. The kingdom’s negotiating team is reported to have given until the end of July for a breakthrough to be made. After that, the exclusive agreements now enjoyed by the consortia could be lost and elements of the ventures opened to public tender.