Shell To Run Abu Dhabi's Bab Field

DUBAI--Royal Dutch Shell PLC (RDSA, RDSB) said Tuesday it was selected by state-run Abu Dhabi National Oil Co., or Adnoc, to operate the strategically important Bab sour-gas field.

Shell will participate in a 30-year joint venture with Adnoc to develop the Bab sour gas reservoirs, 150 kilometers south-west of the capital Abu Dhabi, it said in an emailed statement.

The company will hold a 40% equity stake in the joint venture, which will operate the field, while Adnoc will own the remaining the stake. Gas output from the field will supply the local market in the United Arab Emirates.

Adnoc has previously shortlisted Shell and France's Total SA (TOT) for the estimated $10 billion deal, and industry officials have said that Shell won the bid after the two firms presented competitive offers. The main difference between the two bids was their approach in handling the massive amounts of sulfur produced at the field.

The Bab field, once developed, will produce between 500 million cubic feet and 800 million cubic feet of gas per day, but expertise is required to handle the large amounts of sulfur generated from the estimated 15% hydrogen sulfide content of the gas.

Shell has recommended exporting the sulfur, while Total submitted a proposal to reinject the sulfur back into the reservoir, people with knowledge of the situation have said.

The deal needs to be signed off by the emirate's highest oil authority, the Supreme Petroleum Council--which includes the most senior leaders in the emirate.

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