UAE's Shah gas project launch faces delay

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(Photo for illustrative purposes only)

(Photo for illustrative purposes only)

The UAE's Shah gas project will not be operational until early 2015, the head of the Abu Dhabi National Oil Company (ADNOC) said on Monday, confirming the multi-billion dollar development was behind schedule.

Abu Dhabi energy officials have previously said the project to produce usable gas from Shah's high-sulphur reserves would be completed in late 2014. The project's website also says production should start in 2014.

But ADNOC chief executive Abdulla Nasser Al Suwaidi said the multi-billion dollar project with US-based Occidental Petroleum was likely to come onstream next year.

"There is normal progress, the start up and coming (online) time for such a plant takes time," he said on the sidelines of an energy conference in Abu Dhabi on Monday. He added the company was now targeting a startup in early 2015.

The technically challenging plan to process around 1 billion cubic feet a day (bcf/d) of sour gas into 0.5 bcf/d of usable gas in a remote desert area is vital for keeping the UAE supplied with fuel and reducing its growing gas imports.

As well as gas for industry and power generation, Shah will produce significant volumes of condensate, a light oil that can be used to make vehicle fuels.

ADNOC holds a 60 percent share in the Shah gas development joint venture, called Al Hosn Gas, while Occidental holds 40 percent.

Occidental, the fourth-largest US oil company, said in October it planned to sell some of its stakes in the Gulf region as part of a restructuring meant to lift its stock valuation.

Italy's Saipem was awarded the engineering, procurement and construction (EPC) contracts for the gas processing plant, sulphur recovery unit, and nearly 250 kilometres of related pipelines.

Another EPC for the gas gathering pipelines was awarded to a joint venture of Spain's Tecnicas Reunidas and India's Punj Lloyd.

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