Saudi gas projects hang in balance

Saudi gas projects hang delicately in the balance as the kingdom weighs difficult options to decide the fate of the USD 25 billion investment. Riyadh faces the dilemma of wanting to see the projects go through to open the door for much-needed foreign direct investments, but is unwilling to sign a deal that could be seen as wasting national resources, a Saudi economist said. The eight foreign companies which signed a preliminary agreement in June last year with Saudi Arabia want to see that every component of the complicated projects is profitable on its own, the economist told AFP. Several rounds of talks between the two sides have been held, culminating in a meeting mid July between the ministerial committee and the CEOs of Exxonmobil and Royal Dutch/Shell, Lee Raymond and Phil Watts. Companies have been offered some 10 to 12 percent as a rate of return, but are demanding up to 18 percent. The investment is very complicated, including upstream, mid-stream and downstream projects in gas exploration, petrochemicals, water desalination and power generation. Exploration of gas has been restricted to areas not under Aramco, the national oil company, which the foreign majors claim is not enough.

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