IOCs promised response to 'final offers'

06 September 2002

The government will respond by the end of September to the final proposals submitted by international oil companies (IOCs) on the Saudi gas initiative, says a senior source at the Petroleum & Mineral Resources Ministry.

IOC sources confirm that the companies have been promised a response within the next few weeks to the proposals tabled in late July by the heads of ExxonMobil Corporationof the US and the Royal Dutch/Shell Group, the prospective lead investors in the estimated $25,000 million scheme (MEED 26:7:02).

The sources say the IOCs expect the response either to be a rejection of the proposals or some kind of formulation allowing discussions to continue into the new year. In the event of a rejection, the government is expected to retender individual elements of the scheme, which was originally envisaged as three core ventures integrating upstream development with gas-based petrochemical, power and water projects.

The main demand from the IOCs in the negotiations has been for the allocation of more gas reserves. The Saudi side has been pressing for an adjustment to the financial models to incorporate lower internal rates of return.

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