Article

2004-03-08 Arabia

Foreign Companies to Drill for Saudi Gas

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Posted by Steve White 2004-03-08 00:03|| || Front Page|| [5 views since 2007-05-07] Top

#1 Naimi is the former Prez of Aramco - got kicked upstairs. The story only hints at what transpired in this game:

"A lot of companies couldn't make the numbers work"

1) There were 3 bidding cycles, IIRC... In the first two, nobody bid low enough (their % of the "take") to please the Saudis so they admonished the bidders and tore up the bids. What was at play here is purest greed on the part of the Saudis.

2) Other developments such as this (Indonesia's vast gas fields, for instance) have the commercial firms who take all the risks getting approx 15% average.

3) American and European companies wanted a customary return for wildcatting - which is what this is, for any individual company. The Saudis put zero investment in, but get all of the benefits exceeding the %take in the bid. So Aramco doesn't care if a given hole comes up dry - they get the same even if half the entities working the leases go bankrupt.

When they were told that their percentage, and this is based upon memory from about 3.5 yrs ago, could not exceed 8%, the Americans and Europeans told the Saudis they were crazy. The Saudi response was some blather about future venture goodwill... Remember Wimpy,'s, "I'll gladly pay you Tuesday for a hamburger today." crap? Same same.

The Saudis were, when the smoke settled after the first 2 passes, forced to re-think their game. It was obvious that they couldn't get the pros to play for double the risk at half the stakes. They chose to work with second-tier inexperienced Russkies and Chinese companies - they are more malleable... and I believe the winning bidders have some measure of Gov't backing / underwriting (probably at Saudi insistence), unlike the normal commercial firms that lost out... thus the Saudis are wiring themselves into an important new set of relationships -- or so they think. We shall see. A bad deal is a bad deal - and the Royals' days are numbered. I think the pros were tired of being put over a barrel and screwed by the gutless greedy House of Saud - they did the right thing, FWIW.

Posted by .com 2004-3-8 12:44:15 AM|| 2004-3-8 12:44:15 AM|| Front Page Top

#2 C'mon, guys, think! This is a blatant attempt by the Saudis to ensure the US doesn't ever attack them. They believe the Russians and the Chinese, if heavily invested in Saudi Arabia, won't "allow" the Americans to take over Saudi Arabia. That worked so very well in Iraq, didn't it? China may be willing to try some military bluff, but they're too thinly spread to make it actually work. The princes are scared, and this little deal shows just how much hatred and contempt they have for the West. They hope to use these ham-handed economic deals to provide protection from their blatant meddling in the affairs of every other nation on earth.

Bush would do well to assure the Russians and the Chinese a US-imposed government would honor the gas deal, then move south instead of east or west. After the smoke clears, there would be little left to fund any Wahabbi mosques anywhere. Holding Mecca and Medina hostage, he could then declare the Wahabbi form of Islam a terrorist group, and twist enough arms to make it work. Defund and shut down the mosques and madrasses, put the most rabid Imams in a new prison in the Empty Quarter (60 square miles of desert surrounded by two or three "hot" chain-link fences, with two minimum-flow water fountains), and watch the rest of the world slowly get back to "normal".

Posted by Old Patriot 2004-3-8 9:37:50 AM|| [http://users.codenet.net/mweather/default.htm] 2004-3-8 9:37:50 AM|| Front Page Top

#3 OP - Re: Mekkah & Medinah -- interesting idea! Methinks that'd be the ultimate jihadi flypaper... Prolly keep two or three battalions busy 24x7 restocking the minefields. Bizzy hands are happy hands. ;->

Posted by .com 2004-3-8 10:57:19 AM|| 2004-3-8 10:57:19 AM|| Front Page Top

#4 Finding NG is easy (if its there in sustainable quantity). Then you have to pay to process it (get it sweeter, less moist, etc.). Then you have to build either very long pipelines to consumers (Europe) or LNG plants (very expensive, very inefficient) for sales to Europe and USA. Right, we want more LNG floating around on water-bombs coming into Boston Harbor or Charleston or the Chesapeake! This is why (along with the baksheesh quotient)the numbers don't work. Please not the usual suspects (BP, Shell, Texaco, ELF, Total, etc.) are not in the running - only less sophisticated more socialistic enterprises from 3rd world super powers.

Posted by Jack is Back! 2004-3-8 11:09:42 AM|| 2004-3-8 11:09:42 AM|| Front Page Top

#5 I wonder whether the Saudis will provide extra cash to support reactivation of the Russian Navy. I'm sure that the Saudis don't plan to provide sea lane security.

Posted by Super Hose 2004-3-8 11:41:52 AM|| 2004-3-8 11:41:52 AM|| Front Page Top

#6 Foreign Companies to Drill for Saudi Gas

This isn't hard to do; just stick taps up the asses of royal family members. With all them princes running around, there should be more than enough gas for everybody.

Posted by Bomb-a-rama 2004-3-8 1:13:03 PM|| 2004-3-8 1:13:03 PM|| Front Page Top

02:33 Susan
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