Shell has announced that it has pulled out of the $10bn Bab sour gas project in Abu Dhabi.
The Anglo-Dutch international oil company cited “technical challenges” and the falling price of oil as key factors in its decision.
“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 ADNOC in the emirate of Abu Dhabi, and to stop further joint work on the project,” the company said in a statement.
“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.”
Shell won the contract to develop the sour gas field in 2013, with the multi-national holding a 40% stake and ADNOC the remaining 60%.
The UAE’s Energy Minister Suhail bin Mohammed Faraj Al Mazroui said he was “not worried” by the decision.
“The reason most probably will be a commercial reason because now the cost of gas and the price of gas and LNG has dropped more than 50%,” he said at the World Future Energy Summit in Abu Dhabi.
“We are not worried about supply of gas. We are planning well, if the company is pulling out I’m not worried.”
