Naimi says gas initiative talks to go forward

15 March 2002

Petroleum & Mineral Resources Minister Ali Naimi has reaffirmed the government's commitment to continue efforts to conclude negotiations about the estimated $25,000 million gas initiative, following the failure to reach agreement by the most recent deadline of 2 March (MEED 8:3:02).

'The government and the companies will continue their intense efforts with all the seriousness and proficiency required to overcome what the negotiations may face to arrive at just and balanced agreements that guarantee the kingdom's interests and are acceptable for both sides,' Naimi said in a 12 March statement to the Saudi Press Agency.

Sources close to international oil companies (IOCs) pursuing the talks say that Naimi's statement reflects the recognition on both sides that fundamental issues still need to be resolved, and that it is difficult to impose a fixed schedule on the process at this crucial stage. 'Everybody is getting away from having deadlines as this puts unnecessary pressure on the negotiations,' says one IOC source.

The basic issues that still divide the sides are understood to include the rate of return for the IOCs on the upstream gas development, and the volumes of gas available for exploitation.

Naimi said that delays in projects of this magnitude were to be expected and that some major achievements had been made. 'Many of the tasks that are required by the preliminary-stage agreements have been accomplished, including defining the technical range of the projects and the feasibility studies, and also some progress has been made in the negotiations,' he said. 'Both sides are keen on making these agreements comprehensive, detailed and covering all technical, legal and financial aspects.'

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