Shell pulls out of Bab sour gas development

18 January 2016

UK-Dutch group exits estimated $10bn joint venture project in Abu Dhabi

UK-Dutch oil major Shell has pulled out of a major sour gas project that it had planned to jointly develop with Abu Dhabi National Oil Company (Adnoc) in the UAE.

In April 2013 Shell agreed to take a 40 per cent stake in the Bab sour gas development, planned to add a capacity of 500 million cubic feet a day (cf/d) of sales gas.

“Following a careful and thorough evaluation of technical challenges and costs, Shell has decided to exit the joint development of the Bab sour gas reservoirs with Adnoc in the emirate of Abu Dhabi, and to stop further joint work on the project,” the company said in a statement.

“The evaluation concluded that for Shell, the development of the project does not fit with the company’s strategy, particularly in the economic climate prevailing in the energy industry,” it added.

Shell was awarded the agreement after a competitive bidding round with Adnoc also thought to be considering French group Total’s proposal to develop the field.

The Bab sour gas reservoirs, located 150 kilometres southwest of Abu Dhabi city, would be costly and technically challenging to develop due to high levels of toxic hydrogen sulphide that must be removed through processing.

MEED reported in April 2015 that Adnoc had selected companies for contracts on the front-end engineering and design (feed) and project management consultancy (PMC) work for the project but it is unlikely to go ahead without an international joint venture partner.

Bab was to be the second major sour gas field development in Abu Dhabi to help meet growing demand for gas in the UAE.

MEED revealed last week that Abu Dhabi is moving ahead with a third sour gas project at the offshore Hail and Ghasha fields. Adnoc has invited companies to express interest in bidding for the front-end engineering and design contract.

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