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Oil executives to hold investment talks in S Arabia

DUBAI: Top Western oil executives hoping for multi-billion dollar deals will travel to Saudi Arabia within the next few days for what could be their first tangible talks on investment in the kingdom's vast energy industry.

Majors like Mobil Corp, Royal Dutch/Shell Group, and Chevron are expected to hear long-awaited feedback on investment proposals, industry sources said on Sunday.

They will meet with members of Saudi Arabia's newly-formed Supreme Council for Petroleum and Mineral Affairs, which includes Crown Prince Abdullah, Defence Minister Prince Sultan and Oil Minister Ali al-Naimi.

The Crown Prince invited international companies to present ideas for investments in the kingdom in 1998.

Since then, Western companies have grown increasingly frustrated while waiting for formal negotiations to begin.

Saudi Arabia has made it clear that the heart of its energy business - upstream oil - would remain off limits to foreigners.

ENTICING FIRMS WITH UPSTREAM GAS

But the kingdom recently said it was open for discussion on investment in gas exploration and production. Saudia Arabia has the world's fifth largest natural gas reserves totalling 204 trillion cubic feet.

In late February, Saudi Arabia suggested it was ready for business. It invited international firms to hold what appears will be the most serious talks yet.

When those talks take place in the second half of April, companies are expected to get feedback on proposals. But Western oil executives do not foresee any immediate breakthroughs in one of the Middle East's most cautious countries.

"It will be a feedback and clarification process. We don't expect any nitty-gritty negotiations to start at a time when the country is about to come up with new investment guidelines," a Western oil executive said.

"At this point it would be hard for companies to make economic models," he added.

Saudi Arabia is soon expected to a approve a proposed foreign investment law aimed at attracting foreign capital.

Its financial community has been eagerly awaiting details of the law which could remove regulations which stifle foreign cash flow.

The kingdom is hoping projects carried out by Western oil firms will help create jobs for the hundreds of thousands of Saudi youth expected to enter the workforce every year.

"Creating jobs and economic growth and building new infrastructure is a big priority," said Brad Bourland, chief economist at Saudi American Bank. "They want foreign direct investment and this is a way to jump start it."

Saudi Arabia's Okaz newspaper said Saudi Foreign Minister Prince Saud al-Faisal would start meeting officials from 11 international firms on April 16 to discuss proposals.-Reuters