Abu Dhabi National Oil Company (Adnoc) and the US’ Conoco Phillips have signed a final agreement to invest an estimated $10bn in the development of sour gas reserves at the Shah gas field in the south of the emirate.

The two companies signed the joint venture and field-entry agreement on 9 July, and will form a new company to manage the scheme, according to an Adnoc statement. The company’s ownership will be split 60:40 between Adnoc and Conoco Phillips.

Adnoc and Conoco Phillips did not disclose the value of the project, known as the Shah gas development (SGD) but in May Yousef Omair bin Yousef, chief executive officer of Adnoc, said that it would cost about $10bn.

The SGD is one of the largest energy infrastructure developments to be approved in the Middle East in 2009.

It will result in the two companies develop sour, or sulphur-rich gas reserves, at the Shah field and build processing and transportation infrastructure for 540 million cubic feet of gas alongside liquid sulphur pipelines and an export terminal at Ruwais.

The US’ Fluor completed the front-end engineering and design (Feed) for the scheme in March, and Adnoc released tender documents for the construction phase of the project in June.

Sources close to the project tell MEED that the joint venture partners have delayed tendering the 136-kilometre sulphur pipeline integral to the development after contractors raised concerns over technical and safety issues. Fluor is now understood to be conducting further studies on the pipeline.

“Great attention was given during the FEED stages to select state of the art health and safety systems and as a result of extensive risk assessment and recovery studies,” according to the statement.

Adnoc and Cononco Phillips first agreed to develop the Shah field jointly in February 2008, but delays to the feasibility study and reported renegotiations on contract terms meant the final investment decision was not made until now.
Source: MEED.com