Total SA Withdraws From Saudi Gas Project In Rub-al-Khali After 3 Dry Wells - Bloomberg

[hatrack]

Feb. 7 (Bloomberg) -- Total SA withdrew from Saudi Arabia's South Rub al-Khali, or SRAK, joint venture with Royal Dutch Shell Plc and Saudi Aramco because it failed to find gas. '`SRAK had completed three wells which resulted dry,'' Total spokeswoman Patricia Marie said today in an e-mail. ``Total then assessed the remaining economical potential of the acreage and decided to withdraw from the venture.''

France's Total and Shell, Europe's largest oil company, became the first Western companies to win rights to develop Saudi Arabia's energy reserves after they were nationalized in the 1970s. Western producers are investing in the country's gas and refining industries in a bid to gain future access to its oil reserves, currently developed by Aramco.

``When gas exploration opportunities emerged in 2001 there was genuine excitement about getting access to the Saudi upstream sector,'' Ross Cassidy, an analyst at Wood McKenzie Consultants Plc, said today by telephone from Edinburgh. ``But the contract terms make it difficult for companies to make money, and of the seven wells drilled by four consortia, none have found any commercial quantities of gas.''

Saudi Arabia has fixed the price at which it sells gas to local industries at 75 cents a million British thermal units, lower than the market rate. The companies would need to find liquid-rich gas to make the SRAK venture economically viable because the liquids would provide additional income, Cassidy said.

EDIT

http://www.bloomberg.com/apps/news?pid=20601072&sid=aSNbtEFSk.vY&refer=energy

[GliderGuider]

1. Oops! But I thought the Saudis told us the Empty Quarter had lots of oil and gas?

:shrug:

[hatrack]

2. Oh, it's OK! I'm sure they didn't burn more than $50 or $60 million!

:eyes:

[Nihil]

3. What's that phrase used for selling stuff that isn't there?

> SRAK had completed three wells which resulted dry

> Total then assessed the remaining economical potential of the acreage
> and decided to withdraw from the venture.

> ... of the seven wells drilled by four consortia, none have found any
> commercial quantities of gas.

How are those estimates of Saudi reserves going these days?

:shrug: