Oil report

UPDATE 1-Saudi, Shell JV at 2nd phase in gas exploration

* Shell, Aramco JV kicks-off 2nd phase in gas exploration

* Plans to submit appraisal plan to govt for Kidan area

(Adds details, background)

MANAMA, Oct 25 (Reuters) - A joint venture between Royal Dutch Shell RDSa.L and Saudi Aramco said it had begun a second phase of planned gas exploration in Saudi Arabia, during which it plans to drill three wells in the Rub Al Khali area.

In a rare opening for international firms, state-run Saudi Aramco in 2003-2004 set up four consortiums to drill in the vast desert in Saudi Arabia’s southeast, but so far they have failed to find the volumes of gas needed to fuel Saudi economic growth.

The world’s largest oil exporter has shifted focus to developing gas production to meet rising domestic demand after completing a massive programme to expand its crude oil production capacity last year. [ID:nLDE66I0DY]

The joint venture company, the South Rub Al Khali (Srak), started the second phase of exploration on July 26, it said in a statement on Monday.

“During the second exploration period, three wells are planned to be drilled in this area, in addition to the acquisition of about 3,600 square km of 3D seismic data and 3,000 km of 2D seismic data,” Srak said.

This is below the seven wells that the company drilled in the first exploration phase, which it finished on July 25 after receiving an 18-month extension.

The first phase also included acquisition of approximately 25,000 km of 2D seismic data and 750 square km of 3D seismic data.

Srak has made discoveries in Saudi Arabia. Last year, it said gas from two zones under exploration in the region flowed at a combined rate of 90 million cubic feet per day.

The company also said on Monday that it would submit an appraisal plan to the Saudi government for the Kidan area, which is located in the empty quarter. (Reporting by Reem Shamseddine, Editing by Jane Baird)