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Saudi Arabia - Shell Is Discussing Gas-To-Diesel JV With Aramco.

Shell and Saudi Aramco have begun discussion on the possibility of the multi- national company developing non-associated gas and turning it into premium diesels in Saudi Arabia. A good as the cleanest gasoline, the diesels would be partly consumed locally and partly exported.

This would be a joint venture between Shell and Saudi Aramco. It would compete with a similar venture being promoted in Qatar as a JV between QGPC and Sasol of South Africa. Exxon, proposing to take Mobil in the world's biggest merger valued at almost $250 bn, has been promoting such a project in Qatar as well, with the US market expected to become a major user of high quality diesels produced out of natural gas. Such environmentally-friendly diesels would be much in demand in Europe and the Asia-Pacific region during the next decade.

A top Shell executive visited Saudi Arabia recently to follow up on talks held in Washington last September, during the visit of Saudi Crown Prince Abdullah Ibn Abdel Aziz. In Riyadh the executive was told that, while the Saudi upstream for oil was closed to Saudi Aramco, the upstream for gas was open to any foreign company coming up with a good proposal. Subsequently, Saudi and Shell experts began discussing the gas-to-liquids process which the multinational company has developed, with a major gas plant in Malaysia now producing high quality diesels.

Saudi Arabia's demand for natural gas is expected to rise considerably during the next decade, due to rapid expansion of the power sector and the petrochemical and metal industries. These are based on gas and the focus of Saudi Aramco's current exploration programme is to find additional gas reserves throughout the kingdom.

ENI group of Italy has keen interest in developing a gas field in the north- west of Saudi Arabia near the Jordanian border. The group has proposed to develop the field for export, having promoted a gas pipeline system to be built around the Mediterranean.
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Publication:APS Review Gas Market Trends
Geographic Code:7SAUD
Date:Nov 30, 1998
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