Saudi awards foreign companies multi-billion dollar gas projects

Saudi awards foreign companies multi-billion dollar gas projects

DUBAI (Reuters): Saudi Arabia on Friday declared eight leading
oil companies winners in the race for a stake in its multi-
billion dollar gas development initiative, the kingdom's biggest
opening to foreign investors for 25 years.

ExxonMobil, Royal Dutch/Shell, BP and Phillips were given
stakes in the biggest of three gas projects on offer, the $15
billion South Ghawar development in the eastern province, known
as core venture one, the official Saudi Press Agency (SPA)
announced on Friday.

Exxon secured the leading role in core venture two, on the Red
Sea coast, with Enron and Occidental also winning shares, SPA
said.

Shell, TotalFinaElf and Conoco won stakes in core venture
three, for development of Shaybah in the empty quarter of
southeast Saudi Arabia.

The awards mark the biggest advance in the kingdom's efforts
to develop its gas reserves, the world's fourth largest, since
Riyadh unveiled the energy opening more than two years ago.

Big oil has been competing furiously since then for a stake in
the kingdom's so-called gas initiative, estimated to require
initial investment of $25 billion.

Leaders for core ventures one and three were not revealed, but
SPA quoted Saudi Foreign Minister Saud al-Faisal as saying a
ministerial committee will announce that decision later.

Industry sources expect ExxonMobil and Shell, respectively, to
win the biggest roles in those projects.

"The least surprising element would be having two oil
supergiants running the gas projects," a regional source said.

A formal signing of memoranda of understanding (MOUs) will
take place in the next few weeks, Prince Saud said.

Analysts expect state oil giant Saudi Aramco to participate in
the gas projects which seek foreign oil companies' help in
developing the kingdom's known gas reserves as well as investment
in downstream projects fed by gas supplies, such as power and
desalination.

Chevron, Italy's ENI and Marathon -- which had been on the
kingdom's original shortlist of 11 potential investors -- were
not included in the three awarded projects.

Prince Saud said he hoped those three companies would have
other opportunities to invest in the kingdom.