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28 March 2024

ExxonMobil eyes Shah gas deal

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By Staff

US oil giant ExxonMobil has indicated that it would bid again for the mega sour gas project at Abu Dhabi’s remote Shah field near the Saudi border following the withdrawal of ConocoPhillips from the venture.

ExxonMobil, the world’s largest private oil company, had bidden for the project but lost to Conoco, which announced in April it was ending its 40 per cent stake in the joint Shah venture with the Abu Dhabi National Oil Company (Adnoc).

Adnoc, which controls the Emirate’s mammoth hydrocarbon sector, said this week it was pushing ahead with the development of Shah and could seek new partners in the project, one of the largest sour gas ventures in the region.
In statements published in a local bulletin distributed at an international oil event in Abu Dhabi on Thursday, a senior ExxonMobil executive said the company had lost to the Houston-based Conoco in the bidding process.

“Our experience in sour gas production could greatly benefit a complicated project like Shah...we think our technology and experience from sour gas production elsewhere in the world could be a tremendous asset to Abu Dhabi,” said Morten Mauritzen, ExxonMobil’s lead country manager in Abu Dhabi.

In comments this week, Adnoc’s Secretary General Yousuf bin Omar said the Group is pursuing development plans for the costly Shah project.

“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.

Shah project had been in the pipeline for many years but was delayed because of the surge in costs to over $12 billion. Initial costs were around $eight billion.

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.

From around six per cent during 1990s, growth in gas demand in the country is projected to pick up by nearly 13 per cent in the next decade, according to official forecasts. A large part of the increase will have to be met through the development of local gas resources and imports.

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 involves the construction of the world’s longest sulphur pipeline, expected to stretch nearly 300 kilometres.

The pipeline will transport around one billion cubic feet of produced gas through the desert to Ruwais processing facilities south of Abu Dhabi city.