Shell fends off Total to become UAE's sour gas partner

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Royal Dutch Shell will partner Abu Dhabi National Oil Co. (ADNOC) in a multi-billion-dollar project to develop the Bab sour gas field, the partners said on Tuesday.

The choice of Shell ahead of rival bidder Total to help treat the potentially deadly gases in Bab offers Europe's largest energy company a chance to prove the effectiveness of its latest gas technology.

The 30-year Bab venture also puts the Anglo-Dutch giant in a strong position to renew its role in the UAE's largest onshore oil concession, on which the Bab field stands, when that contract comes up for renewal early next year.

"We value our long and successful partnership with ADNOC, and look forward to continuing to play a role in helping the United Arab Emirates meet its energy needs," Shell Chief Executive Peter Voser said in a statement.

Shell had been widely expected to win the contract to develop Abu Dhabi's Shah gas field in 2011, but lost out to Occidental Petroleum.

UAE state news agency WAM said earlier on Tuesday that ADNOC would own 60 percent of the Bab joint venture's equity and Shell would hold the rest.

Total was overlooked for the Bab project despite a French charm offensive which included a visit to the UAE by French President Francois Hollande in January.

Bab, and the almost as technically challenging Shah sour gas project, are vital to limit the UAE's growing gas imports over the next decade.

Shah, which was developed first because it is seen as less difficult than Bab to develop, is on track for completion by the end of 2014.

Because Bab sits in one of the fields that make up the UAE's onshore oil concession, some industry observers believe the selection of Shell is likely to support its efforts to continue operating the oil fields for decades.

The UAE oil concession system allows international energy companies to acquire equity in the OPEC member country's hydrocarbon resources.

Big western oil companies including Shell are long-standing partners with ADNOC in the Abu Dhabi Company for Onshore Oil Operations but face rival bids to run the fields, which produce about 1.5 million barrels per day from Asian companies.

Bids from international oil companies hoping to operate the onshore fields beyond 2014 are due by the start of October.

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