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Occidental to develop Shah sour gas project

Exploration & Production

Abu Dhabi has awarded the lead contract to develop the emirates complicated Shah sour gas project to Occidental Petroleum Corp. beating out Exxon Mobil Corp. and Royal Dutch Shell.

Occidental will join Abu Dhabi Gas Development Co., a unit of ADNOC, in developing Shah with the US company holding a 40 per cent stake in the project with ADNOC holding the majority 60 per cent stake, reported Bloomberg.

Occidental's stake will last 30 years and capital spending is estimated to be about US$10 billion for the project, with Occidental's share proportional to its ownership.

Shah, about 180km from the city of Abu Dhabi, poses a technical challenge because it contains gas that is mostly sour, or high in hazardous hydrogen sulphide. The hydrogen sulphide must be stripped from the gas before the fuel can be used. The sulphur must then be converted into a solid and transported 250km to be exported.

Shah, scheduled for completion by the third quarter of 2014, will process 1 billion cubic feet a day of sour gas into about 500 million cubic feet of fuel daily. It may also process 4,400 tonnes of natural-gas liquids a day, 35,000 barrels a day of condensates and 9,200 tonnes a day of sulphur.

Abu Dhabi's Shah project has had a rough ride as the original foreign partner, ConocoPhillips, withdrew from the project last April, so ADNOC has been looking for a new foreign partner.

Occidental "will, providing it is successful in developing the project, establish itself as the global leader in ultra-sour gas production," Samuel Ciszuk, a senior Middle East energy analyst at IHS, said.