Saudi gas initiative talks push into 2003

27 November 2002

Talks aimed at pushing forward the gas initiative are to extend into 2003, following the three core ventures' submission of responses to government proposals. The consortium carrying out core venture 3 submitted its response in mid-November, while those for core ventures 1 and 2 are to respond by the end of the month (MEED 4:10:02).

The government and the consortium carrying out venture 3 are said to have agreed on most of the terms for the downstream elements of the scheme. However, it is understood that they have not yet resolved the upstream difficulties over acreage and access to Saudi Aramco reserves.

Core venture 3 is headed by the Royal Dutch/Shell Group and includes the US' ConocoPhillips and France's TotalFinaElf. Core ventures 1 and 2 are both headed by the US' ExxonMobil Corporation.

The ministerial committee pursuing the projects for the government is likely to review the core ventures' responses by the end of this year. All three ventures are to proceed concurrently, so that the next stage of negotiation for each project is unlikely to happen before the first quarter of 2003.

Given the tortuous path of negotiations so far, the gas initiative is unlikely to go ahead in its present form, if at all. The main downstream elements of the project - three large power and water co-generation plants - are already being tendered for private development in partnership with the government's power and water bodies. Moreover, Aramco's own master gas network is larger than ever and growing at a formidable pace.

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