Saudi Pick Exxon Mobil Gas Projects*

June 3, 2001

Saudis Pick Exxon Mobil and Shell for Huge Gas Projects

By BLOOMBERG

IYADH, Saudi Arabia, June 2 — The Exxon Mobil Corporation, the world's largest publicly traded oil company, has been chosen to lead a $17 billion gas development in Saudi Arabia, and the Royal Dutch/Shell Group will head the smaller Shaybah project, the official Saudi Press Agency reported today.

Exxon Mobil will explore for and produce gas from any deposits beneath the southern area of the kingdom's Al Ghawar field, the world's largest oil field, the agency said. Shell will lead a $4 billion development of Shaybah in the Empty Quarter desert.

The Ghawar project is the centerpiece of the kingdom's plan to allow foreign access to the world's fifth- largest natural gas reserves for the first time in more than two decades. Saudi Arabia wants to convert its oil- fed power industry to natural gas, spurring industrial development.

Saudi Arabia picked the two companies for the lead roles in the projects "because of their expertise, technical and financial capabilities," Foreign Minister Saud al-Faisal said.

Exxon Mobil was also chosen last month to lead an estimated $4 billion project in the Red Sea area.

TotalFinaElf, BP P.L.C., Conoco Inc., the Phillips Petroleum Company and the Occidental Petroleum Corporation were selected as junior partners in the three projects to help Saudi Arabia convert its utilities from burning oil to gas.

The seven companies will sign preliminary agreements with the kingdom on Sunday, before beginning final negotiations. Talks are expected to conclude by year's end with production-sharing agreements.

The investments are meant to spur the Saudi economy and provide jobs for the kingdom's unemployed.


(Original Len: 2000 Condensed Len: 2353)


Created by Eintime:CondenseHtmlFile on 060514 @ 16:53:29 CMD=RAGSALL -LP83
(Len=2526)