Source Pravda.Ru

Big Oil Excited By Saudi Suggestions Of Privatisation

Saudi Aramco, which is the biggest oil group in the world, could be broken up and part privatised in a move which has excited the interest of western oil companies BP and Shell. The surprise move was announced by Saudi oil minister Ali al-Naimi, who confirmed separately that his petroleum ministry had already started to establish a publicly owned energy services company. Saudi Aramco is a state owned oil group which controls the country's production of over ten million barrels of crude a day, twelve percent of the world production, while also holding twenty five of all known reserves left in the ground. Mr Naimi said that his new support services firm would provide engineering, seismic survey and drilling work, adding “we are also studying the possibility of privatising some of Saudi Aramco's operations”. The disclosures came in a speech at the weekend to Saudi Aramco employees and Saudi crown prince Abdullah, who is in Texas after talks with George Bush about the Israeli-Palestinian crisis. The remarks about Saudi Aramco were seen as highly significant given that western oil firms such as ExxonMobil, BP and Shell have recently been awarded contracts to work on gas projects in the world's biggest oil producing country. Foreign firms have traditionally been kept out of the oil and gas sector in Saudi Arabia. Crown prince Abdullah, effectively the ruler now, has made it clear that he wants to modernise the economy to make it more efficient and to create more jobs. BP has said it was too early to jump to conclusions but said it was interested. “We would have to look and see how, when and where it [privatisation] was to be done," said a spokesman. The world's second largest publicly traded oil group behind ExxonMobil is a participant in one of the three new gas projects and an industry expert who knows BP well said “every oil company wants to be close to where the major reserves are and Saudi Arabia is the heart of it all”. Shell said it “would not comment on this kind of thing” but sources pointed out that Shell was an operator on one of the new gas schemes in Saudi Arabia and had a downstream joint venture in the US with the Saudis known as Motiva, which includes refineries and 12,000 petrol stations. “Shell is very interested in Saudi Arabia,” said the source. While world oil groups will follow developments closely, they will be aware that delays and policy U-turns cannot be ruled out. The gas deals are behind schedule and have not been officially signed off yet amid wrangling over price and other critical issues. The thirty percent part-privatisation of another industrial firm, Sabic, went ahead as expected but the anticipated sale of the remaining stake in the group never happened. Although BP and Shell will announce this week a massive downturn in first quarter profits, they have enormous cash reserves and second quarter figures will benefit from another major rise in crude prices.

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