If it is to avoid marring an otherwise excellent year, Adnoc must show some leadership. Either of the Shah schemes could be made to work
That Abu Dhabi National Oil Company (Adnoc) has suffered only one, relatively minor, setback in 2009 is little short of a miracle. If its remaining projects go according to plan, Adnoc and its subsidiaries will have awarded construction contracts on no fewer than three projects worth more than $10bn each this year.
It will also have awarded a further $10bn worth of deals on smaller schemes – not bad for the middle of a global downturn in trade.
The state energy giant may award $40bn worth of contracts inside a year, a huge achievement in logistical terms alone. The only setback to the programme of awards is the delay to a key component of one of the $10bn-plus mega-projects: the development of sour, or sulphur-rich, gas reserves from the southern Shah field.
Adnoc and its joint venture partner, the US’ ConocoPhillips, have to choose between building a 264-kilometre-long pipeline or a new railway to transport 7 million tonnes a year of sulphur from Shah to processing and export facilities in the north of the emirate.
“The joint venture originally wanted to build the pipeline, but has favoured procrastination over action”
The joint venture originally wanted to build the pipeline, but it has favoured procrastination over action. Its inability to make a decision has already threatened to delay related contracts on the project.
An engineering firm has already conducted one feasibility study on the pipeline project. By commissioning a second study on the pipeline, Adnoc has inconvenienced the contractors it has asked to bid for a sulphur-handling plant at the firm’s export terminal at Ruwais.
If Adnoc scraps the pipeline, it will also have to scrap the sulphur-handling plant. Doing so would waste both the contractors’ goodwill and their money.
If it is to avoid marring an otherwise excellent year, Adnoc must show some leadership. Either of the Shah schemes could be made to work. There is no need for