Saudi Gazette: KSA shifting to unconventional gas resources

Saudi Arabia's decade long 'Gas Initiative' is unraveling - taking new turns and twists!

Launched by the then Crown Prince, and now Custodian of the Two Holy Mosques King Abdullah Bin Abdul Aziz, way back in September 1998, when during an hour long private meeting with senior executives of seven US oil majors he invited them to help develop the Kingdom's energy resources. The unexpected overture, which took everyone by surprise then, was made at the opulent McLean, Virginia, residence of the then Saudi ambassador in Washington Prince Bandar Bin Sultan. Those attending the meeting included senior executives from four American oil giants - Mobil, Exxon, Texaco and Chevron - which established the Arabian American Oil Co., now known as Saudi Aramco, in the 1930s. Senior executives from Atlantic Richfield, Conoco and Phillips Petroleum also attended. The executives attending the meeting were apparently "shocked" at the offer, reports later said.

The Saudi Strategic Gas Initiative was heralded as the first foreign investment in Saudi Arabia's upstream energy sectors. Western oil firms shown strong interest in the Initiative, hoping that a foot in the door with less than desirable gas projects might ultimately be rewarded with more lucrative upstream crude deals.

Initially, the three mooted gas projects focused on a $15 billion scheme to develop gas reserves in South Ghawar field and two minor $5 billion ventures that involved gas production for petrochemical, power and water desalination projects. However, internal opposition and drawn out negotiations, as well as questions about the Aramco reserve estimates, stifled the early euphoria. MORE