Question mark raised over core venture

22 March 2002

The final form of the Saudi gas initiative may entail only two core ventures going ahead, rather than the three that have been envisaged, a senior Saudi lawyer said during a panel discussion on the initiative on 19 March at the MEED Congress in Dubai.

Responding to a question regarding the possibility of one core venture being carried out before the others, Mohammed al-Jadaan, of the local Law Firm of Yousef & Mohammed al-Jadaan, allied to Clifford Chance, said that in fact there was a chance that one of the ventures might be dropped. He declined to identify which one he was referring to, but industry analysts have been quoted as saying that core venture 2 (CV2) could be seen as the least likely of the three to progress.

CV2 has been allocated to a team led by the US' ExxonMobil Corporation, which will hold 60 per cent of the venture, while Marathon Oil Company and Occidental Petroleum Corporation, both also of the US, have 20 per cent each. It entails the development of fields that have not been previously explored along the Red Sea coast. Unlike the other areas, there is no actual gas production or gas availability in the region where CV2 is being carried out.

Officials of the CV2 principals were unavailable to comment on what Al-Jadaan insisted was only a personal opinion, not based on specific inside information. Sources familiar with aspects of the CV2 negotiations said that the success of the project was by no means ruled out and that plenty of groundwork is already under way on the understanding that the venture will go ahead.

ExxonMobil has also denied reports that it is pulling out of core venture 1 (CV1). The erroneous reports were made after a number of technical workers on CV1 left the kingdom or transferred their duties to CV2. Sources close to CV1 say that the workers had already completed their duties, which were of a purely technical nature (see Special Report).

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