Saudi Arabia signed upstream gas exploration and production agreements with Russian giant Lukoil on Sunday as Chinese, Spanish and Italian firms waited their turn to ink deals later in the day that the kingdom hopes will attract billions of dollars in investments.
Contracts to explore for and produce non-associated gas in the northern part of the vast Rub al-Khali, or Empty Quarter desert, were also to be signed at the same ceremony in Riyadh by China Petroleum and Chemical Corp (Sinopec), and a consortium formed by Spanish oil group Repsol YPF and Italy's Eni.
State-owned Saudi Aramco is a partner in the three ventures, controlling 20 percent of the stakes in each of the projects in three regions covering a total area of 120,000 square kilometre's (46,000 square miles).
Vagit Alekperov, president and chief executive officer of Lukoil put pen to paper with Abdullah Jumah, president and CEO of Saudi Aramco and the kingdom's Oil Minister Ali al-Nuaimi.
"For the first time in the history of bilateral relations the doors to Saudi Arabia have been opened to the Russian petroleum business community," said Alekperov.
"The size of the investment will depend on the size of prospection and exploration work and it could go up to around three billion dollars," he said.
Al-Nuaimi looked to future profits. "The area Lukoil and Saudi Aramco will jointly explore measuring 29,900 square kilometres contains promising indications that we expected will yield profitable returns to the kingdom and Lukoil," the minister noted.
In November, Saudi Arabia signed a multi-billion-dollar landmark deal with a consortium led by majors Royal Dutch/Shell and Total for gas exploration and production in south Rub al-Khali in the south of the kingdom.
But ambitious 20-billion-dollar mega gas projects negotiated with consortia led by US oil giant ExxonMobil Corp were abandoned when talks collapsed last summer.
An integrated Saudi Natural Gas Initiative (NGI) which included power, water and petrochemical projects in addition to gas exploration and production also collapsed, prompting the kingdom to break up the project and tender it in parts.
Under the terms of the contracts being signed Sunday, the exploration phase has been set at 10 years, divided into three periods of five, three and two years, with the latter two optional, a senior oil ministry official said Saturday night.
The contracts, awarded in late January, will run for a maximum of 40 years, the ministry's director general in the oil-rich Eastern Province, Yahya Shinawi, told reporters.
The north Rub al-Khali basin has been divided into three "contract areas," designated A for Lukoil, B and C.
Associated gas and oil are "outside the scope" of the agreements, although they provide for the conditional exploitation of 500 million barrels of oil in place, he said.
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