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Shell exits development of Bab sour gas reservoirs

Hydrocarbon Engineering,

The statement from Shell reads: Following a careful and thorough evaluation of technical challenges and costs, Shell has decided to exit the joint development of the Bab sour gas reservoirs with Abu Dhabi National Oil Company (ADNOC) in the emirate of Abu Dhabi, and to stop further joint work on the project. The evaluation concluded that for Shell, the development of the project does not fit with the company’s strategy, particularly in the economic climate prevailing in the energy industry.

The UAE’s Energy Minister, Suhail Al Mazroui, has responded by saying he is not deeply concerned with the development, “We are not worried about the supply of gas at this stage,” Mazroui said, on the sidelines of the World Future Energy Summit. “We are planning well. I’m not worried.”

“The reason most probably (behind Shell pulling out) is going to be commercial because now the price of gas, LNG, has dropped more than 50%,” said Al Mazroui. “That’s probably the reason. Developing a more expensive solution is not going to be viable at this time but it’s also good news for us because we do not want to develop gas that is more expensive than the gas we can import.”

The Minister ensured that Adnoc was still committed to gas production, commenting that Shell’s move allows the UAE more flexibility to get “the cheapest gas we can get.” Al Mazroui went on to say that the UAE will continue to import gas for the time being while it focuses on several other ideas and projects in the pipeline.

The supposed joint venture (JV) was seen as a stepping stone that allowed Shell to renew a coveted concession that would help to develop the UAE’s largest onshore oilfield. The Bab sour JV envisaged the construction of a 1 billion ft3 sour gas processing plant for domestic market consumption.

Adapted from press release by

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