Re: Saudi Arabia cancels ng deal

[Barkley Rosser <rosserjb@xxxxxxx>]

    Internal Saudi politics are more enigmatic than anything
that went on in the old Soviet Union.  We still do not have a
straight story on why longtime intelligence chief, Prince
Turki bin Faisal, was fired after 9/11, an incredibly murky
business indeed.
     A simple sign of how opaque the place is that it is the
only country in the world besides North Korea that Amnesty
International is unable to verify reports of human rights abuses
on.  For those of you not in the AI loop, AI Urgent Actions are
all based on clear verification.  Even Afghanistan under the
Taliban was more open.
Barkley Rosser
----- Original Message -----
From: "Ian Murray" <seamus2001@xxxxxxxxx>
To: <PEN-L@xxxxxxxxxxxxxxxx>
Sent: Thursday, June 05, 2003 3:03 PM
Subject: [PEN-L] Saudi Arabia cancels ng deal


> [wonder what brought this about...]
>
>
> June 5, 2003
> Saudi Arabia Cancels $15 Billion Gas Project
> By REUTERS
>
>
> Filed at 1:06 p.m. ET
>
> DUBAI - Saudi Arabia told Exxon Mobil today that it had closed talks on a
$15-billion gas project, the biggest
> Saudi energy opening in nearly 30 years, oil company and Saudi sources
said.
>
> Saudi Oil Minister Ali al-Naimi sent notice in a letter to Exxon and
fellow consortium members ending negotiations
> to develop gas in the South Ghawar field, the best Saudi upstream
opportunity since oil nationalization in the
> 1970s.
>
> The failure of the opening deals a heavy blow to Saudi economic reforms,
launched in 1998 by Crown Prince Abdullah,
> the kingdom's de facto ruler.
>
> Western executives believe Naimi wants to split up the projects, keeping
gas field development in the hands of
> state-owned Saudi Aramco and tendering out contracts for gas-powered
electricity, petrochemical and desalination
> plants.
>
> In the United States, a person familiar with the negotiations said that
all the members of the Exxon consortium had
> received a cancellation notice from Riyadh. A Saudi industry source
cancellation was effective June 15.
>
> Exxon declined to confirm the deal was dead but company spokesman Tom
Cirigliano said: ``We can confirm that we
> have received correspondence from the oil minister and we are currently
evaluating it.''
>
> Other potential investors in what was known as core venture one were Royal
Dutch/Shell, BP and ConocoPhillips. All
> declined comment.
>
> The companies had wanted access to more gas than the Saudis were offering,
and the two sides also disagreed over
> the rate of return for the downstream industrial projects.
>
> For some, this unprecedented deal was doomed virtually since the ink dried
on preparatory agreements sealed two
> years ago between Riyadh and the world's leading oil majors.
>
> ``This is not terribly surprising. Saudi Arabia's mistake was not to
design its initiative in a logical way from
> the beginning,'' said Robert Mabro, President of the Oxford Institute for
Energy Studies.
>
> ``And the companies appeared to be willing to do things, such as water
desalination, which were not in their core
> business. It was surprising they did not display sufficient political
sense and finesse.''
>
> The Saudi industry source could not comment on whether Riyadh was prepared
to re-open the contest for its gas
> reserves -- the world's fourth biggest.
>
> Western executives also expect core venture three, the $5 billion Shaybah
development led by Shell, now also will
> be scrapped.
>
> It has been an uphill battle for majors seeking access to Saudi gas
reserves ever since Prince Abdullah unveiled
> the outlines of the industrial mega-projects four years ago.
>
> But some Western oil executives began to fear the worst after a key ally,
foreign minister Prince Saud al-Faisal,
> took a back seat to Naimi, who assumed full control of the talks when he
was reappointed to a third term as oil
> minister last month.
>
> Core venture two, the $5 billion Red Sea development, led by Exxon and
including Marathon and Occidental has been
> off the table for some time.
>