JEDDAH, 3 June — ExxonMobil has won the coveted lead role in the $15 billion South Ghawar project, the prize gem in the Kingdom’s landmark gas development opening, the Saudi Press Agency reported yesterday. The US energy giant edged out stiff competition from rival supermajor Royal DutchShell, which was awarded the leadership role in the $5 billion Shaybah gas development project or Core Venture Three.
SPA quoted Foreign Minister Prince Saud Al-Faisal as saying that a ministerial committee that supervised negotiations with foreign oil firms recommended that the two companies be assigned the leading roles in the two projects.
“The ministerial committee based its recommendations on what the two companies enjoy in terms of expertise and competence and due to their technical and financial resources which would enable them to carry out the roles assigned to them in the best way possible,” Prince Saud, who heads the panel, said.
He said the committee would pass on its recommendations to the Supreme Council for Petroleum and Mineral Affairs to consider them before signing preparatory agreements with the world majors.
Exxon had already landed the lead position in the third gas package on offer by Riyadh, the $5 billion development of the Red Sea coast. Both Exxon and Shell already have significant foreign investments in the Kingdom and feature as top customers of Saudi oil, analysts said.
The Kingdom on May 18 announced that eight major oil companies would get stakes in the three gas projects, worth a combined $25 billion in initial investment. Chief executives from the companies and Saudi officials are due to sign preparatory agreements today in Jeddah.
Exxon, as leader of the South Ghawar development — or Core Venture One — is to get a 35 percent stake, while Shell and BP are to get 25 percent each and Phillips 15 percent, industry sources said.
In Shaybah, or Core Venture Three, Shell will be granted a 40 percent share, with Conoco and TotalFinaElf getting 30 percent each, according to industry sources.
“There is more than enough in these projects for everyone to have a prominent role,” a Western industry source said. The deals mark the reopening of Saudi Arabia’s upstream gas industry 25 years after nationalization. The Kingdom holds the world’s fourth biggest gas reserves. Oil development remain solely in the hands of state-owned Saudi Aramco.
Oil executives said many details are still to be ironed out in the gas opening, unveiled more than two years ago. Fiscal and regulatory frameworks are to be worked out during the second half of the year — in time to meet a yearend target for signing final contracts, industry sources said. When ground is broken, it will mark the return of ExxonMobil to the Kingdom’s upstream industry.
