RIYADH, June 6: With the shelving of the prime project in the $25 billion Saudi gas initiative, the Core Venture 1 worth $15 billion, it is now apparent that the entire gas initiative would be restructured and presented to bidders.

It was evident for the last few days that the oil majors are not ready to accept the terms offered by the Saudi government. Although the officially stated point of concern of the oil majors was the internal rate of return (IRR) on the investments, many here feel two other issues have also contributed to the ultimate result of the initiative.

Many say the post-9/11 scenarios made the US oil majors reluctant to invest in Saudi Arabia and this was the economic fall out of the uneasiness in the political relationship of the two governments.

Then the emergence of Iraq in the aftermath of the US invasion also made it apparent that the oil majors have lost their appetite and the interest in the Saudi gas initiative. They were looking the other way, some here felt.

In the meantime, it is expected that a number of other bidders would re-enter the market and would try and take their share in the priced concessions. ENI of Italy has been one among the original bidders in the initiative but was not included among the initially selected bidders. Despite being left out, it seemed they had not lost al the hopes.

On receiving the news of the shelving of the CV1, a source within the ENI in Riyadh said: “We were expecting the entire project to be divided into smaller pieces and re-offered for bidding. Once we have all the details of the Saudi decision, then we would send it to our head quarter for evaluation. We would be able to let know the response of ENI only after we have received the indications from the head quarter.” Apparently things have changed over the last few months. The emergence of the Iraqi market would also have a bearing on the final decisions of the other multinationals.

Russians also seem keen to participate in the bidding. During one of his visits to Moscow, Saudi oil minister Ali Al-Naimi was asked if there was any possibility of the Russian companies to get involved in the process. It now seems that opening has emerged.

Koreans and Chinese have also indicated their eagerness in past in this direction. It is still too early to gauge their response, but they will definitely weigh the changes in the geo-political realities before taking a decision on the projects, it is widely believed.

There is also a possibility now that some of these projects could be assigned to Saudi Aramco and Sabic, sources here maintain. Oil majors have been blaming Saudi Aramco for the deal falling through. There is, thus a possibility that Aramco would take over the task of processing and production of gas, while Sabic will be entrusted with the task of developing the petrochemical sector.

The utility companies in the Kingdom would now have to move fast to be able to meet their projected requirements. Some of the projects were in waiting for quite some time, as some of the downstream utility projects were also a part of the initiative. Now such projects have to be taken in hand on priority so as to avoid any problems in meeting the growing water and electricity requirement of the Kingdom.