UAE Set To Award Bab Gas Project To Shell

Abu Dhabi National Oil Co. (ADNOC) has recommended that Shell win the multi-billion dollar project to develop its Bab gas field, but the UAE’s higher authorities have yet to rule on it, industry sources said on Wednesday.

Industry newsletter International Oil Daily reported on Tuesday that state-run ADNOC had recommended that the Supreme Petroleum Council (SPC) pick Royal Dutch Shell ahead of rival French bidder Total to develop the ultra-sour gas project the United Arab Emirates needs to temper growing gas imports.

Three industry sources confirmed to Reuters on Wednesday that ADNOC had recommended Shell ahead of Total to tackle Bab’s potentially deadly gas.

The SPC and EC usually agree with ADNOC decisions, but as of Wednesday neither had ruled on whether to officially award Shell a project which has been valued at $10 billion.

“Shell’s selection is recommended to the higher authorities,” a senior source at ADNOC told Reuters.

Spokespeople for ADNOC, Shell and Total declined to comment.

The Bab ultra-sour gas deal would give Shell, which many had expected would win the contract to develop Abu Dhabi’s Shah gas field in 2011 but which lost out to Occidental Petroleum , a showcase project for Shell gas treatment technology.

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.

Total being sidelined for the Bab project comes 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, the ADNOC source said.