RIYADH, Oct 11: Saudi Arabia said on Saturday that Royal/Dutch Shell, Total and state Saudi Aramco recently finalised a landmark deal to find and pump gas in the kingdom ahead of final approval by the Saudi government.

Saudi Oil Minister Ali al-Naimi said in comments carried by the state news agency SPA that the necessary organisational measures were now being completed for government approval.

The project could see up to $2 billion invested to develop a 209,160 square km (80,740 sq mile) block in the southern part of the vast Empty Quarter desert.

A Western oil executive told Reuters last week that the Shell-led consortium had put the final touches on the deal, but that the kingdom’s Supreme Petroleum Council had yet to approve it. He said formal approval was expected to come in November.

The project, a pared down version of the $5 billion Shaybah venture that Anglo-Dutch Shell and its French partner Total had negotiated for five years, was the sole survivor of the kingdom’s so-called gas initiative for foreign investors.

The two other multi-billion dollar gas development packages fell apart after a prolonged contractual dispute.

Naimi in July presented three areas in natural gas exploration to international energy companies to be offered in the kingdom’s first ever licensing round and said the auction would be held by the first quarter of 2004.

The programme to offer projects in non-associated gas exploration, development and production...is proceeding on schedule, Naimi said on Saturday.

The Shaybah venture originally included pipelines, power plants and water desalination projects. These will be tendered separately.

Shell will have 40 per cent of the project, with Total and Saudi Aramco holding 30 per cent each. ConocoPhillips, involved in the original Shaybah talks, decided not to join the venture.—Reuters