RIYADH, April 6: While there are constant speculation in the international media of obstacles in finalizing the deal with global oil majors participating in the Saudi gas initiative, there are reports now that one of the three gas development projects under consideration currently, may ultimately be abandoned on account of differences over the financing terms between the Saudi negotiating team and the global oil majors.

An international petroleum journal quoting Saudi lawyer Mohammad Jadaan, regarded as close to the ongoing discussions between the two sides, made the observation.

Jadaan, who did not reveal which of the three “core projects” could be dropped, spoke during a Dubai meeting earlier of ‘mounting differences’ between the Saudi Kingdom and the companies involved on the technical and financial terms (of contracts) .

“It is possible that one of the three core ventures will be abandoned because the two parties realise it is not feasible,” Jadaan was quoted as saying by the journal.

Industrial sources cited by the publication said he was referring to the Red Sea project that has been awarded preliminarily to a consortium directed by ExxonMobil that also includes Occidental Petroleum and Marathon Oil. The project calls for investment of $5 billion over the next five years.

The Kingdom signed preliminary accords in June 2001 with eight foreign companies to develop three gas fields at a cost of between $20 and $25 billion.

The official signing of the three projects, which was rescheduled for early March, has been delayed until wrangling over the taxation proposals, returns on investment and size of the gas estimates are over between the Saudi negotiating team and the global oil majors.

The Core One project awarded to ExxonMobil and which includes Royal Dutch Shell and British Petroleum of the United States calls for an investment of about $15 billion.

The third project, believed to be still on groups Shell with TotalFinaElf of France and Conoco of the United States with projected investments of roughly $5 billion.