The United Arab Emirates will award a multi-billion dollar contract to develop the Bab sour gas field in a few weeks and Royal Dutch Shell is in a strong position, an Adnoc director said.
Shell in strong position to win Bab sour gas contract, Adnoc director says
The UAE will award a multi-billion dollar contract to develop the Bab sour gas field in a few weeks and Royal Dutch Shell is in a strong position, the director of Abu Dhabi National Oil Company (Adnoc) said on Monday.
Industry sources said in March that Adnoc had recommended to the Supreme Petroleum Council (SPC) that Royal Dutch Shell be awarded the project to tackle Bab's tricky sour gas ahead of rival bidder Total.
The SPC usually agrees with Adnoc decisions, but has not yet ruled on whether to award Shell the project which has been valued at US$10 billion.
"Soon we will pick one of them... in a couple of weeks," Adnoc director general Abdulla Nasser al Suwaidi said on the sidelines of the Middle East Petroleum & Gas Conference organised in Abu Dhabi.
"The recommendation is not disclosed at this time, because it's still an internal process, but Shell has a good standing."
The ultra-sour gas deal could give Shell a showcase to project its gas treatment technologies. Many had expected it to win the contract to develop Abu Dhabi's Shah gas field in 2011 but it lost out to Occidental Petroleum.
It also could give the Anglo-Dutch energy giant a competitive edge in talks for the 2014 renewal of the UAE's largest onshore oil concession on which the Bab field stands.
The concession system allows oil and gas producers to acquire equity in hydrocarbon resources from the Opec member country. The Adco concession which produces about 1.5 million barrels per day is the first due for renewal at start of 2014.
Bids from international oil companies hoping to operate the onshore fields are due by the start of October. Some observers have said this schedule may not give Adnoc enough time to fully assess the bids and might extend the current constracts.
But Suwaidi said the renewal process remained on track.
"There is no change in the agreement (duration), the agreement will expire in 2014," he said.
Adnoc holds a 60 per cent controlling stake in Adco while oil giants ExxonMobil, Shell, Total and BP each hold a 9.5 per cent stake.
Asian oil companies are keen to get stakes in the concessions, but Suwaidi said it was too early to say which companies might table attractive bids.
Total looks likely to be overlooked for the Bab project despite a French charm offensive which saw French President Francois Hollande fly into the UAE in January to help Total's bid.
The winning bidder for the Bab project will be expected to form a joint venture with Adnoc as the majority shareholder.