Saudis cancel deal with western firms for huge gas project

Monday, June 9, 2003

ABU DHABI Saudi Arabia has apparently canceled an estimated $30 billion natural gas development project.

Saudi Oil Minister Ali Al Nuemi was said to have fulfilled his threat to cancel the project because it did not obtain an agreement to the kingdom's terms, Middle East Newsline reported.

Eight Western energy majors that submitted bids were said to have been dissatisfied by the profit margin and the size of the exploration tracts.

Officials said Russia has offered to replace some of the Western companies in the tender.

Riyad had set a June 4 deadline for unconditional acceptance of the Saudi terms for the project. Saudi sources said ExxonMobil will withdraw from the project as of June 15. ExxonMobil was said to have been offered the largest portion of the gas and infrastructure project.

Last week, ExxonMobil said it was evaluating the letter from Al Nueimi. The letter said the the company has not abandoned negotiations with Riyad.

Saudi Arabia has already canceled a $5 billion project led by ExxonMobil. ExxonMobil had teamed with Marathon and Occidental for the project.

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