Occidental to partner Adnoc in Shah gas project

Abu Dhabi: Abu Dhabi has selected the US-based oil and natural gas exploration company Occidental Petroleum as a partner to develop the Abu Dhabi National Oil Company's (Adnoc) Shah gas project, foreign news agencies reported yesterday citing an unnamed Adnoc official.

Adnoc officials reached by Gulf News late yesterday declined to confirm the deal. Occidental was yet to post the news on its website.

The Shah sour gas field is located onshore approximately 180 km southwest of the city of Abu Dhabi.

"It's unclear how this deal is going to be structured," Kate Dourian, Middle East editor of Platts, a global energy information provider, told Gulf News by telephone.

Difficult project

"Shah is a big and a very difficult project and Occidental is entering a project which is already in progress and where contracts have been awarded," said Dourian.

The US was the source of 53 per cent of Occidental's production in 2009, according to information available on its website. In addition, Occidental has a greater percentage of its proven reserves in US assets — 64 per cent — than all major oil and gas companies.

Occidental is the leading oil producer in the Permian Basin of southwest Texas and southeast New Mexico, with a production rate of approximately 201,000 barrels of oil equivalent (boe) per day in 2009. It is also the largest natural gas producer and second-largest oil producer in California, where net daily production averaged 135,000 boe in 2009.

High demand

Dourian said the UAE is increasingly in need of new gas supplies as its energy demand is running above the economic growth rate.

In April last year, ConocoPhillips, the third-biggest US oil company, pulled out of the Shah gas project. The company, which would have been a 40 per cent stakeholder in a Shah joint venture with state-owned Adnoc, didn't give an explanation for the decision.

Adnoc said it will go ahead with the Shah project, whose development cost at the time was close to Dh36.7 billion.