UAE not worried by Shell pullout from Bab sour gas project

Abu Dhabi - Royal Dutch Shell said it had decided to exit the $10 billion Bab Sour gas development field in Abu Dhabi as oil prices plunge continue.

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By Haseeb Haider

Published: Mon 18 Jan 2016, 11:00 PM

Last updated: Wed 20 Jan 2016, 11:15 AM

Abu Dhabi is not worried about Royal Dutch Shell's exits from the developmet of Bab sour gas field project.
"The reason most probably will be (a) commercial reason because now the cost of gas and the price of gas and LNG has dropped more than 50 per cent," UAE Minister of Energy Suhail bin Mohammed Faraj Al Mazroui said on the sidelines of the World Future Energy Summit in Abu Dhabi.
"We are not worried about supply of gas. We are planning well, if the company is pulling out I'm not worried," the Minister said.
On Monday, Royal Dutch Shell said it had decided to exit the $10 billion Bab Sour gas development field in Abu Dhabi as oil prices plunge continue.
The Anglo-Dutch company in a statement on its website said that "following a careful and thorough evaluation of technical challenges and costs it will stop further joint work on the project with the Abu Dhabi National Oil Company or Adnoc."
Robin Mills, a leading energy expert and chief executive officer of Dubai-based consultancy Qamar Energy, was not surprised, given the high cost of the project, and the need for all oil companies to spend carefully in the current situation.
The energy columnist said: "I would presume Adnoc will now try to proceed with development on their own. They may try to find a partner for a smaller-scale development of the Bab sour gas."
Brent crude prices are hovering around $31 a barrel from $110 a barrel in mid-June 2014.
Shell was picked up on April 30, 2013 by the Abu Dhabi National Oil Company to participate in a 30-year joint venture to develop the major Bab sour gas reservoirs in Abu Dhabi.The Bab sour gas reservoirs are located 150 kilometres south-west of the city of Abu Dhabi.
There was a plan to supply the treated gas to the local market in Abu Dhabi where industrial activity has picked up stream.
The joint venture was also seen at the time as a stepping stone for Shell to renew a coveted concession to develop the United Arab Emirates' largest onshore oil field.
The project envisaged the construction of a 1 billion cubic feet sour gas processing plant for domestic market consumption.
"The evaluation concluded that for Shell the development of the project does not fit with the company's strategy particularly in the economic environment prevailing in the energy industry," the statement added.
Adnoc was expected to hold 60 per cent of the Bab sour gas project, while Shell would have held 40 per cent.
Shell's presence in Abu Dhabi dates back to 1939 as a shareholder of Petroleum Development (Trucial Cost) Ltd.
Today, Shell is a joint venture partner in the Abu Dhabi Company for Onshore Oil Operations (Adco) and in Abu Dhabi Gas Industries, or GASCO.
Royal Dutch Shell is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. - haseeb@khaleejtimes.com

Haseeb Haider

Published: Mon 18 Jan 2016, 11:00 PM

Last updated: Wed 20 Jan 2016, 11:15 AM

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