Abu Dhabi: Conoco-Phillips has won a contract for a project expected to cost more than $10 billion to develop sour gas reserves in the UAE, sources at Abu Dhabi National Oil Company (Adnoc) said yesterday.

The project was one of the largest upstream projects in the past year open to international companies competing for access to the Middle East's oil and gas fields.

"ConocoPhillips is the winner of the project," said one Adnoc source, who declined to be identified. "The official signing [of the contract] will take place soon."

A second source at Adnoc also said Conoco had won the project. The company emerged as the front runner for the contract last month, beating competition from ExxonMobil, Occidental Petroleum and Royal Dutch Shell.

Conoco was expected to take a 40 per cent stake in the project, while Adnoc would hold the rest.

Sour gas requires treatment to reduce the content of sulphur or other impurities. Developing the sour gas at the Shah field would cost at least $10 billion, an industry source said.

Costs for the project have escalated, as they have worldwide in the energy sector.

Last year, analysts pegged the price of developing Shah and a second field called Bab at $10 billion. Now, the cost is as high for just the one field.

The UAE holds the world's fifth-largest gas reserves at nearly 214 trillion cubic feet, much of it sour. Record oil revenues have fuelled economic expansion and rapidly rising demand for gas from both the power sector and the Gulf state's growing heavy industry.