Saudi Arabia Withdraws Natural Gas Deal

Saudi Arabia has decided not to open its natural gas fields to Western oil majors such as ExxonMobil, Shell, BP or TotalFinaElf. Saudi Foreign Minister Prince Saud al-Faisal outlined the kingdom's new stance last week in a letter to the oil-company consortia, led by ExxonMobil and Shell. On the key issue of opening its premier fields to non-Saudi companies, the letter "said absolutely not," according to one oil-company official.

Instead, the Saudis are offering less-significant regions for natural-gas exploration and production. But the oil companies feel these areas would not yield sufficient income to merit the multibillion-dollar investments they would have to make. The talks with the Saudis also involved Marathon Oil Corp, Occidental Petroleum Corp and the two companies newly merged into ConocoPhillips. The largest of the plan's three segments was the $15 billion South Ghawar project led by ExxonMobil, with Shell, BP and ConocoPhillips as partners. It involved building a gas processing plant, doing some gas production to feed a petrochemical operation and building a string of water and power plants.