Newspaper article THE JOURNAL RECORD

Saudis Deal with 3 Major U.S. Firms

Newspaper article THE JOURNAL RECORD

Saudis Deal with 3 Major U.S. Firms

Article excerpt

NICOSIA, Cyprus (AP) - Saudi Arabia has concluded deals with three major U.S. oil companies that could lower the price of its oil and raise production, the Middle East Economic Survey reported Monday.

The authoritative oil and economic publication, published in Nicosia, said the deals on the basis of ""netback price'' with Exxon, Texaco and Mobil have been ""confirmed beyond doubt.''

Netback pricing relates crude oil prices to market prices for refined petroleum products in certain markets. Middle East Economic Survey said that using such a scheme could lower the price for Arabian light crude by $2 to $3 below the $28-per-barrel official OPEC price.

The Middle East Economic Survey said top Saudi sources had indicated the agreements would send a warning from Saudi Arabia to fellow members of the Organization of Petroleum Exporting Countries andproducers outside the cartel that ""Saudi Arabia can no longer be taken for granted as the sole buttress of world oil prices.''

""In other words, if need be, the kingdom is ready for a price war,'' the publication said.

At Exxon Corp.'s New York headquarters, spokeswoman Juliet McGhie declined comment on the report, saying it was a company policy not to comment on supply arrangements. Ria produced oil at a rate ofabout 2 million barrels per day in August, a 20-year low. …

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