Abu Dhabi National Oil Company (Adnoc) has chosen UK/Dutch Shell Group to be the joint owner of its project to develop the onshore Bab sour gas reservoirs.
Shell will take a 40 per cent stake in the new joint venture beating French oil major Total, which was widely touted as the favourite to with the deal.
“The two companies will now enter a period of commercial and technical work leading to the development of the Bab gas reservoirs,” Shell said in a statement.
The Bab sour gas reservoirs, located 150 kilometres southwest of Abu Dhabi city, will be costly and technically challenging to develop due to high levels of toxic hydrogen sulphide,that must be removed through processing.
The estimated $10bn development is expected to have a capacity of about 1 billion cf/d of sour gas, which will be processed to a smaller amount of sales gas and associated sulphur and liquid petroleum gas (LPG).
This will be the second major sour gas project to get the green light in Abu Dhabi, with the $11bn Shah gas development on track to be completed by the end of 2014.