Russia gets 40 year Saudi gas contract

Monday, March 8, 2004

ABU DHABI A Russian firm expects to find huge natural gas reserves in Saudi Arabia.

Russia's LukOil, which on Sunday signed a 40-year contract, plans to recover very significant gas reserves in the Rub Al Khali area of central Saudi Arabia.

LukOil signed a contract with Saudi Aramco on Sunday for exploration and development of gas reserves in the northern part of Rub Al Khali. Saudi Aramco also signed similar deals with Chinese, Italian and Spanish energy firms, Middle East Newsline reported.

Eighty percent of the project has been allocated to LukOil, with Saudi Aramco provided a stake for the remainder. The joint venture, known as Luksar, will form an 11-member board that will contain eight executives of the Russian company.

LukOil, expecting to invest $3 billion, said the probability of a discovery of commercial quantities of hydrocarbons exceeds 80 percent. The company, which expects a minimum rate of return on investment of 12.5 to 15 percent, was granted an area of about 30,000 square kilometers and will borrow $215 million from the Saudi-Holland Bank for the five-year exploration effort.

"For the first time in the history of bilateral relations, the doors to Saudi Arabia have been opened to the Russian petroleum business," LukOil chief executive officer Vagit Alekperov said.

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