Shell & Oxy on Short List for $10B Abu Dhabi Sour Gas Project

ABU DHABI Dec 05, 2007 (Dow Jones Newswires)

Royal Dutch Shell PLC (RDSA.LN) and Los Angeles-based Occidental Petroleum Corp. (OXY) are the final contenders for a $10-billion project to develop sour gas reserves in Abu Dhabi, o be awarded within two weeks, people familiar with the project said Wednesday.

The pair make the final shortlist of bidders drawn up by Abu Dhabi National Oil Co. (ADO.YY), or Adnoc, people familiar with the situation told Dow Jones Newswires.

Adnoc, which produces almost all the oil in the United Arab Emirates, was expected to award the country's largest-ever non-associated gas development some time this month.

The successful bidder for the contract will enter into a joint venture with Adnoc to help it develop Abu Dhabi's Shah field, which contains large reserves of very high-sulfur and corrosive gas.

Sour gas is more costly and challenging to process because its corrosive nature requires special handling and infrastructure.

Shell and Occidental are left in the race after Adnoc left Exxon Mobil Corp. (XOM) and ConocoPhillips (COP) off the final shortlist.

Abu Dhabi last year decided to move ahead with the development of its sour resources gas as high oil prices have made the project commercially viable.

The estimated $10 billion program is crucial to meet fast-rising gas requirements in the U.A.E., driven by a rapidly growing population, the addition of new gas-fired power and desalination plants, and the development of new industries with high gas requirements, such as aluminum and petrochemicals.

Abu Dhabi has more than 200 trillion cubic feet of gas reserves, the fifth largest in the world, a large portion of which are sour.

Copyright (c) 2007 Dow Jones & Company, Inc.

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