Lukoil wins major Saudi gas contract

Russian oil and gas giant Lukoil signed Monday a contract with Saudi Arabia for the exploration and production of gas north of the Rubi al-Khali or Empty Quarter desert in the first deal of its kind in the kingdom involving a Russian company, Saudi officials said.
"The Russian firm Lukoil has won and signed a gas exploration and production contract," in a 30,000 square kilometres (11,600 square miles) area in the Rubi al-Khali, Saudi Oil Minister Ali al-Nuaimi was quoted by the official news agency SPA as saying.
Lukoil, which was selected through a bidding process, will own 80 percent of a new company being set up for the project while Saudi state-owned oil and gas giant Aramco will own the remaining 20 percent, according to Nuaimi.
An Aramco official who spoke on condition of anonymity said the deal marks "the first venture between Aramco and a Russian company."
No information on the size or terms of the Lukoil deal were provided but it was part of a previously announced plan by the kingdom to invite foreign firms to bid on contracts for gas exploration and production in an area totalling 120,000 square kilometre's (46,000 square miles) in the Empty Quarter.
The area has been divided into three sections designated A, B and C.
The Lukoil contract covers area A and the remaining winning bids for B and C would be revealed by Wednesday according to Nuaimi.
The deal with the Russian firm comes after a historic visit by Saudi Arabia's Crown Prince Abdullah bin Abdul Aziz to Moscow in early September, which saw the two countries sign a five-year oil and natural gas co-operation accord that Russian officials at the time said could lead to deals worth up to 25 billion dollars.
In November, Saudi Arabia signed a multibillion-dollar landmark deal with a consortium led by majors Royal Dutch/Shell and Total for gas exploration and production in the south of the kingdom.
Saudi Arabia, which sits atop the world's biggest oil reserves, has proven natural gas reserves of 235 trillion cubic feet, the fourth largest.
Current gas production in the kingdom is around seven billion cubic feet daily but there are plans to boost it to about 10 billion cubic feet per day by 2010.