Oil Industry Saudi Arabia

Exxon Mobil Corp., BP Amoco, Royal Dutch/Shell Group, TotalFinaElf and other oil companies may sign multibillion-dollar gas projects with Saudi Arabia as early as April, the country's foreign minister said.

Saudi Arabia signed agreements with nine international oil companies Sunday, a move that marks the first major foreign investment in its energy sector since nationalizing the industry in 1975. The deals, worth a total of $25 billion or more, involve the development of three natural gas fields in the kingdom and a number of related power plants, transmission pipelines and water desalinization projects.

Saudi Arabia, the world's largest oil producer, said it won't borrow money on the international markets to finance next year's budget deficit, which is forecast to reach $12 billion, the country's finance minister said Sunday. Saudi banks and "national reserves are capable of meeting the shortfall," said the kingdom's finance minister, Ibrahim al-Assaf, the official SPA news agency reported. "We can cover the budget deficit either through issuing bonds or through domestic borrowing," he said.

Three powerful oil-producing nations--Saudi Arabia, Venezuela and Mexico--met in London and reiterated plans to boost production later this year but did not say how much or when. The three nations account for about a fifth of the world's oil output and are the top suppliers to the United States, which has been calling on its allies in the Persian Gulf states and elsewhere to increase production to stabilize prices.

Saudi Arabia provided hope for a break in high worldwide oil prices Monday by pledging to step up production by 500,000 barrels a day if the current price of crude doesn't fall swiftly and sharply. Although the extra Saudi production probably wouldn't be available in this country for 45 days or more, the announcement could quickly change the psychology of the energy markets.

Oil futures tumbled Tuesday, offering consumers hope that sustained price relief may be on its way, the day after Saudi Arabia broke ranks with OPEC colleagues and pledged to pump more crude. Crude oil plunged $1.52, or 4.9%, to settle at $29.58 a barrel in London, as dealers took seriously the Saudi pledge to raise crude output within the next few days despite not having yet secured the support of fellow members of the Organization of Petroleum Exporting Countries.

Fluor Corp.'s Fluor Daniel engineering and construction unit said Tuesday that it has received an $800-million contract to oversee the development and installation of a petrochemical plant in Saudi Arabia. Fluor said in a press release that it expects to book $10 million in the third quarter for initial program management and engineering services on the project. Saudi International Petrochemical Co.

Oil superpower Saudi Arabia told an OPEC summit in Caracas, Venezuela, that it stands ready to supply the amount of crude needed to tame unruly prices but urged consuming countries to play their part by reducing fuel taxes. Crown Prince Abdullah, in day-to-day charge of the world's largest oil producer, said he is worried that a continuation of high prices could harm the world economy and prospects for growth.

Saudi Arabia, Venezuela and Mexico, producers of 20% of the world's oil, said they will cut global output to reverse a slump in prices that recently reached a nine-year low. Oil ministers from the three countries, after meeting in Riyadh, the Saudi capital, pledged to cut 600,000 barrels a day, or 0.8% of the world supply. Production could fall as much as 2 million barrels a day, or 2.7%, if others cooperate with their plan, they said.

Oil ministers from Venezuela, Mexico and Saudi Arabia will meet in Europe today to discuss the possibility of cutting output by at least 500,000 barrels a day, according to a source familiar with the meeting. "There is a recognition that the previous cuts did not do enough," the source said, adding that the cuts "could be 500,000 barrels per day or maybe more." Today's meeting is expected to take place in Amsterdam.