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Shell delays its UAE sour gas project as oil prices plunge, eroding the spending power of the IOCs and revenues of host nations. With upstream margins under pressure, Shell is also putting off further development of Iraq’s Majnoon oil field.
Shell has pushed back a final investment decision (FID) for the Bab sour gas project in Abu Dhabi until 2017 while stepping down from the competition for a slice of the UAE’s onshore oil concession, as part of a plan to cut costs and prioritize only the most affordable upstream projects. The moves confirm the ongoing trend of project cancellations and delays being undertaken by nearly all the IOCs, which are having a knock-on effect on some Middle Eastern producers like the UAE and Iraq, where Shell is delaying full field development of the troublesome Majnoon oil field. Occidental Petroleum (Oxy), the foreign partner involved in the development of Shah, the UAE’s only currently producing sour gas field, is still looking to divest part of its assets in the Middle East, but appears to have had a change of heart with respect to its UAE, Qatari and Omani assets and looks set to stay on in all three, while divesting its non-core assets. (CONTINUED - 1606 WORDS)