Saudi Arabia sets Nov 1 deadline on gas projects
Saudi Arabia has given foreign oil firms such as Royal Dutch/Shell Group and ExxonMobil Corp until Nov 1 to respond "positively" to a final offer made by Riyadh over three large gas projects, or risk losing the deal, Asharq Al-Awsat daily reported citing Saudi sources.
"In case the companies refuse the offer, talks would be considered as over and preliminary agreements and commitments would become null and void," the paper cited a source on the Saudi negotiating team as saying.
Foreign Minister Prince Saud al-Faisal, who heads the negotiating team, has reportedly offered to increase the rate of return from downstream facilities to 15%, the paper said.
The offer was made early September in a letter to the lead firms ExxonMobil and Royal Dutch/Shell, it added.
The Saudis have offered a guaranteed rate of return of between 14.5-15.5% from the power generation, water desalination and petrochemical facilities associated with the projects.
Foreign companies have been demanding a rate of return of 18-20% as against the Saudi initial offer of 10-12%.
Saudi Arabia has also agreed to increase the quantities of gas available for the foreign firms to make the investment viable, the Saudi source said.
Saudi Arabia last year selected eight Western oil firms to develop gas in three fields and to set up downstream facilities.
The foreign firms are expected to pour in investments to the tune of $25bn (€25.2bn).
The companies are grouped in three consortia, two led by ExxonMobil and the third by Royal Dutch/Shell. The other members are BP Group PLC, TotalFinaElf, Phillips Petroleum Co, Occidental Petroleum Corp, Marathon and Conoco Inc.
