Saudi Crown Prince Abdullah met privately over the weekend with senior executives from seven U.S. oil companies to discuss the Americans' possible involvement in oil and gas development, said administration and industry sources.
The meeting was confirmed by Saudi officials, although they did not elaborate.
Energy Secretary Bill Richardson, who did not participate in the meeting, said he was told by Saudi Oil Minister Ali Naimi that "the meeting with the executives went extremely well."
Richardson, who is to visit Saudi Arabia in December to discuss increased energy ties between the two countries, met with Naimi and Abdullah earlier this week.
Abdullah has held the reins of the Saudi government since 1995, when his half-brother, King Fahd, had a stroke. While the crown prince is pushing for increased ties with the U.S. companies, Naimi was said to be less enthusiastic about it and argued against such a move, fearing a political backlash from Islamic nationalists.
Saudi Arabia, the world's largest petroleum producer, nationalized its oil industry in 1973 and has excluded foreign companies from its exploration and production operations ever since. Some U.S. companies continue to participate in refining and petrochemical activities in the kingdom.
Industry and administration sources, speaking on condition of anonymity, said the Saudi overture stems from Saudi's growing economic problems caused by low oil prices, soft worldwide demand and increased competition, especially from Mexico and Venezuela.
Yehya Sadowski, associate professor of Middle East studies at Johns Hopkins School of Advanced International Studies, noted that the kingdom has used up the bulk of its capital assets to pay off the United States for fighting the Persian Gulf War.
"Ever since then they've had difficulty keeping their budgets in the black," said Sadowski. "Oil prices are weak, and they desperately need capital to invest in their oil sector to keep the oil flowing. They don't have that capital, but the oil companies do."
Sadowski said the Saudis have been pushing U.S. rather than non-U.S. companies because "that means in effect you're buying the support of American oil firms and their influence over the U.S. government which could be very useful for the Saudis."
While industry officials confirmed the meeting, some participants characterized it as a general discussion about increased cooperation. Others said the Saudis had sought specific recommendations from the U.S. executives.
Naimi is expected to conduct further discussions with oil companies individually in the coming days, according to one U.S. source, who spoke on the condition of no being further identified.
The Washington Post, which first reported the weekend meeting in Wednesday's editions, quoted one participant as saying Abdullah had asked for specific recommendations and suggestions from the companies on what role they might play in exploring and developing existing and new Saudi oil fields.
Those attending the meeting included senior executives from Mobil Corp., Exxon Corp., Texaco Inc. and Chevron Corp. all partners in the Arabian American Oil Co., Aramco, in the 1930s. Also present were executives from Atlantic Richfield Co., Conoco Inc. and Phillips Petroleum Co.
Saudi Arabia has the world's largest oil reserves more than 260 billion barrels the lowest costs of extracting oil and the most production of any country in the world 8 million barrels a day.
But it has lost market share over the past decade to Mexico, Venezuela and Canada and has been forced to slash production recently because of the collapse of Asian economies.
Written By H. Josef Hebert