"But, perhaps emboldened by the potential investment opportunities in neighbouring Iraq, oil groups have stood their ground after two years of negotiations, resisting terms offered by the Saudis that would have given less than a 10 per cent return on investment. "
now i'm waiting to hear how all this will bring down wahabism and the house of saud, making saudi arabia secular and democratic.
j
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Setback for Saudi gas initiative By Roula Khalaf and Carola Hoyos in London Published: June 5 2003 20:59 | Last Updated: June 5 2003 20:59
Saudi Arabia's ambitious initiative to attract foreign investment into its vast gas reserves faced collapse on Thursday after the oil ministry told a consortium led by ExxonMobil that it was scrapping a proposed $15bn (€13bn, £9bn) investment project.
The cancellation, which comes into effect on June 15, dooms the largest venture in a $25bn gas initiative that has been a symbol of Saudi economic reforms.
A second consortium, led by Royal Dutch/Shell, that was negotiating another part of the initiative was yesterday expecting to receive its own letter. But it was unclear whether that project would survive.
The Saudi move is a disappointment to international oil companies that have long sought to gain a foothold in the upstream energy sector of the world's largest oil producer.
But, perhaps emboldened by the potential investment opportunities in neighbouring Iraq, oil groups have stood their ground after two years of negotiations, resisting terms offered by the Saudis that would have given less than a 10 per cent return on investment.
The letter followed a Saudi ultimatum last month to the seven international energy groups involved in the initiative, demanding a final answer to a Saudi offer that had been rejected in the past.
The companies found the terms unacceptable but sought to counter the ultimatum by sending a vague response.
Their hope was that the negotiations would be pursued and that Crown Prince Abdullah, the de facto ruler, would intervene to save the initiative.
Conceived by the crown prince, the gas initiative was designed by a ministerial committee to attract much-needed investment into power generation, water desalination and petrochemicals.
But after two years of talks and opposition to the deal from Ali Naimi, the oil minister, the energy groups resisted the terms and the extent of access to upstream gas in areas reserved for state oil company Saudi Aramco.
Western oil industry officials said on Thursday the Saudi move would deal a blow to the country's image at a time when the threat of terrorist attacks in the kingdom had made attracting foreign investment all the more difficult.
"If they think the companies were greedy they should offer the projects under the same terms to others and see if they get anywhere. No one wants to take losses here," said one industry executive.
But Saudi sources said it was the repeated delays in clinching deals that had hurt Saudi Arabia's image, forcing the oil ministry to issue its ultimatum.
The government, in any case, now appears convinced the initiative should be restructured. Sources in Riyadh said the government would break up the initiative, separating the gas projects from power, petrochemicals and water desalination and offer different parts to foreign investors. The government insists that international companies, including some energy groups, are "waiting in the wings". -------------- next part -------------- A non-text attachment was scrubbed... Name: not available Type: text/enriched Size: 3689 bytes Desc: not available URL: <../attachments/20030606/856bb598/attachment.bin>