Adnoc Seeks JV Partners for $12B Shah Proj.
ABU DHABI (Zawya Dow Jones), July 12, 2010
Abu Dhabi National Oil Co., or Adnoc, is talking to potential partners for help with the $12 billion development of the Shah sour gas field after ConocoPhillips' withdrew from the project earlier this year, a company official said Monday.
"Adnoc is in talks for joint venture partnerships," Saif Al Ghafli, Adnoc representative and chief executive officer of Adnoc affiliate Abu Dhabi Gas Development Co., said in Abu Dhabi after signing four contracts with international companies as part of the Shah project.
Al Ghafli didn't say which companies Adnoc is talking to.
Adnoc has embarked on a search for potential partners to join it on Shah after ConocoPhillips pulled out from the development in April. The U.S. oil major had planned to be a joint venture partner but withdrew to focus on projects yielding short and medium-term revenues. The Shah project is seen as a long-term contributor to value, ConocoPhillips said at the time.
The Shah sour gas field development is essential to help Abu Dhabi meet gas demand in the emirate, which has surged as the government builds gas-fired power stations, desalination plants and develops industries such as petrochemicals. Abu Dhabi is the largest of seven emirates that make up the United Arab Emirates.
The project aims at producing 1 billion cubic feet a day of sour--or sulfur-rich--gas and stripping out the sulfur and transporting it to processing and export facilities.
Plans for Shah have been held up due to the technical difficulties linked to developing the field's large reserves of sour gas, which is highly corrosive and more costly and challenging to process as it requires special handling and infrastructure.
Al Ghafli said Monday the project was set to come on stream in the third quarter 2014 and Adnoc would press on with its plans even if it failed to bring on board a partner.
"We are not holding things back til a partner comes, we're already awarding contracts," Al Ghafli said.
Abu Dhabi Gas Development earlier Monday signed four contracts with Saipem, Samsung Engineering, Technicas Reunidas, and Punj Lloyd for various packages on the field development.
Adnoc is also in ongoing talks with the U.A.E.'s Union Railway Co. over transporting the toxic sulfur, which will be a byproduct from the sour gas development, via rail to export facilities at Ruwais on the Persian Gulf coast.
"For Adnoc to give it (to Union Railway), they must agree on financial and physical terms and conditions, cost and rates, which will govern the relationship," Al Ghafli said. If a deal is agreed, "Union will build the rail line and Adnoc will pay to use it," he added.
State-run Union Railway is tasked with developing a 1,100-kilometer railway network across the oil-rich Gulf Arab state.
Abu Dhabi Gas Development in June awarded the $160 million contract to provide project management consultancy, or PMC, services on the Shah project to Fluor.
Copyright (c) 2010 Dow Jones & Company, Inc.