ADNOC mulls gas partners
The Abu Dhabi National Oil Company (ADNOC) is in no rush to choose a new partner for its signature sour gasfield development and has sufficient supplies from other sources to meet rising demand across the emirate, says a top company official.
ADNOC needs the technical expertise of a foreign partner to develop the toxic Shah reservoir near the Saudi Arabian border, analysts agree, but it has offered no comment on a replacement since ConocoPhillips pulled out of the development in April.
ADNOC may wait well into next year to announce its decision and could choose a combination of foreign partners if it makes commercial sense, said Abdulla al Suwaidi, the company's deputy chief executive.
"There is no time frame, it is not an urgent matter," he said yesterday on the sidelines of the ADIPEC energy conference in the capital.
"We have gas, but of course there is rising demand."
The US$10 billion (Dh36.72bn) to $12bn Shah development would produce more than 500 million cubic feet per day of processed gas for use in Abu Dhabi's power stations and is needed over the medium-term to meet a looming gas shortage across the emirate. Analysts have estimated the field's gas production costs at well over $5 per million British Thermal Units (BTUs), which is significantly above the cost of previous developments and is at least five times the rate ADNOC commands for the gas on the domestic market. Mr al Suwaidi said the Shah cost estimates were exaggerated but declined to give further details.
The higher costs have put increased pressure on the Abu Dhabi Government, which buys the bulk of ADNOC's gas and sells it to the emirate's electricity producers, incurring hefty losses. A proposal to raise electricity prices to reduce the subsidy losses is now being considered by the Executive Council, the emirate's top decision-making body.
Bloomberg yesterday reported three companies had been short-listed as potential joint-venture partners on the Shah project, citing "two people familiar with the plan". The companies mentioned were ExxonMobil, Royal Dutch Shell and Occidental Petroleum.
Updated: November 2, 2010 04:00 AM