Under the terms of the agreement, Shell and Totalof France will form a joint venture with Saudi Aramcofor the exploration, production and development of gas in the 200,000-square-kilometre area originally assigned to CV3, the Rub al-Khali zone in the southeast of the kingdom. Shell will assume the role of operator on the development and take a 40 per cent stake in the venture, with the remaining 60 per cent evenly split between Total and Aramco. The US' ConocoPhillips, which had been part of the original group pursuing CV3, withdrew from the venture.

A source close to the project says that seismic surveys are due to begin 'very soon' after final contractual details have been arranged.

No commercial details have been released on the deal, but the source says that original scepticism about the quantity of gas available was alleviated by separating the upstream from the mid- and downstream elements. 'The original CV3 had a risk problem because of all the upstream elements involved,' the source says. 'Without the requirement to invest huge sums into these elements, one can accept a different set of risks.'

In addition to the upstream works, CV3 originally included the establishment of an independent water and power project (IWPP) at Jubail and a world-scale petrochemical complex.

The landmark deal will allow international oil companies (IOCs) for the first time since the creation of Aramco to become involved in the upstream development of the kingdom's hydrocarbons reserves (MEED 27:6:03, Cover Story).

The development came almost a week before the ministry was due to hold a presentation to about 50 IOCs on plans for a restructured scope for the upstream elements of core venture 1 (CV 1) and possibly elements of core venture 2 (CV 2) . The meeting will be held in London on 22 July.