RIYADH, Sept 28: Saudi Arabia has raised to 15 per cent the rate of return from downstream facilities in three mega gas projects in a bid to break a stalemate with foreign companies, a newspaper quoted an oil executive as saying on Saturday.

Al-Madina said Foreign Minister Prince Saud al-Faisal, who heads the kingdom’s negotiating team, made the offer early September in a letter to the lead firms ExxonMobil and Royal Dutch/Shell.

The oil executive reportedly said the Saudis have offered a guaranteed rate of return of between 14.5 to 15.5 per cent from the power generation, water desalination and petrochemical facilities associated with the projects.

The Saudis are expecting to get a response from the companies within one month of receiving the offer, said the executive who added that Prince Saud made a take it or leave it final offer.

Foreign companies have been demanding a rate of return of 18 to 20 percent as against the Saudi initial offer of 10 to 12 percent.

Saudi Arabia has also agreed to increase the quantities of gas available for the foreign firms to make the investment viable, the executive said.

Royal Dutch Petroleum president Jeroen van der Veer said on September 18 the company hoped to break the stalemate in negotiations over the projects within the “coming months”.

An industry source told AFP Saturday the two sides have not resolved another problem over who owns the oil-gas condensates which will be produced along with the gas.

Riyadh has insisted the condensates belong to the national oil giant Saudi Aramco, while the foreign firms have also made a strong claim.

Saudi Arabia last year selected eight Western oil firms to develop gas in three fields and to set up downstream facilities.

The foreign firms are expected to pour in investments to the tune of $25 billion.

The companies are grouped in three consortia, two led by ExxonMobil and the third by Royal Dutch/Shell. The other members are BP, TotalFinaElf, Phillips, Occidental, Marathon and Conoco.

Negotiations have stumbled over the amount of gas available in the fields and the financial terms for the companies’ downstream investment.

The projects, known as the “Saudi gas initiative”, mark the first opening in the Gulf kingdom’s energy sector since it was nationalised in 1981.

But it only involves gas production and development, with oil production remaining firmly a monopoly of state-owned giant Saudi Aramco. —AFP