ConocoPhilips said on Monday it was eying new oil projects in the UAE despite its withdrawal from a major gas venture in Abu Dhabi last year.
The Houston-based US company, the world’s fifth largest private energy corporation, said it had pulled out of the Shah sour gas project in line with what it described as strategic changes in the company.
Speaking to Emirates 24/7 at an international oil event in Abu Dhabi, Fareed Salem, Conoco’s Vice President, Business Development in the Middle East and North Africa, said the company’s decision to end its 40 per cent shareholding in the mega gas venture was not prompted by its high costs.
“We are taking part in this event because we want to maintain our relationship with Adnoc…we are interested in entering partnerships in new projects in the emirate and hope we will get contracts in the future,” he said.
Salem said several factors had forced Conoco to pull out of the Shah joint venture with the Abu Dhabi National Oil Company (Adnoc) but stressed they are not related to the project itself or Adnoc.
“It was not because of the project but it was part of strategic changes of the company…the withdrawal has nothing to do with the high investments in the project or other factors related directly to the project…it was just part of basic changes in the Company’s strategies.”
In press comments this week, Adnoc’s CEO Yousuf bin Omair said the Company, one of the largest hydrocarbon producers in the world, is pushing ahead with the development of Shah just near the Saudi border. He said Adnoc could invite new partners to the project after Conoco’s withdrawal.
“Adnoc is continuing development plans for the field according to plans…ConocoPhillips’ withdrawal will not affect these plans…we are currently discussing whether to admit new partners into the venture if we find it suitable and meet the required standards and if we believe this will constitute a significant addition to this vital project,” he said.
In recent statements, another Adnoc official said the sharp decline in construction expenses because of the global crisis is expected to slash the costs of the Shah sour gas project by more than 30 per cent.
Ismail Al Rumhi, Director of the Gas Treatment Section at Adnoc said the Shah project would be among several bids to be invited by Abu Dhabi in the next two years, adding their cost would be billions of dollars.
Rumhi did not specify the new cost of Shah Sour Gas project but industry sources had estimated it at more than $12bn in mid 2008.
The project had been in the pipeline for many years but was delayed because of the surge in costs. Initial costs were around $8bn.
Shah development is part of a long-term investment programme by Abu Dhabi to expand its gas resources and meet a rapid growth in demand due to a steady expansion in the industry sector and power generation facilities.
Officials have admitted that the project is one of the most difficult hydrocarbon ventures in the emirate in terms of area, topography and safety.
“Area topography, the size and nature of the facility, and HSE issues related to the very sour gas have been identified as major challenges for the project and would continue to be addressed throughout the life of the facility,” said Saif Ahmed Al Ghafli, who had headed the Adnoc-Conoco Joint Venture.
The US-based Fluor Corporation has carried out the FEED work for Abu Dhabi Gas Industries (Gasco), the Adnoc subsidiary which is managing the scheme.
The project, one of the largest upstream gas development ventures in the region, originally included the development of both the Shah and the Bab fields. Due to mixed reactions from contractors it was then divided into two separate packages. The Shah portion of the project has been divided into several packages such as a sulphur recovery units package at Shah, a product pipeline package at Shah, a liquid sulphur pipeline package from Shah to Ruwais.