The prevailing economic climate in global energy sect has led Royal Dutch Shell Plc. (RDSA) to announce a call off for its multibillion dollar Bab sour gas reservoirs’ development due to non-competence with company strategy plans.
“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 Abu Dhabi National Oil Co. (ADNOC) in the emirate of Abu Dhabi, and to stop further joint work on the project.” –Royal Dutch Shell
Shell, that looks onto its deal completing for BG acquisition in the upcoming months, stated on 3rd November to have been pulling all levers to sail smoothly through toughest period of plunging crude in comprising a decrement in both operating costs and capital expenditure of 2015 with 10% and 20%, respectively – total worth US$ 11 billion.
As for being share-holders of the Bab sour gas project: Abu Dhabi National Oil Co. was expected to hold 60%, while Royal Dutch Shell Plc.an estimate of 40%.
Upon a thrust of press releases regarding Shell’s non-pleasant ultimatum, UAE’s energy minister, Suhail Al Mazroui states a sigh of contentment withno apprehensions:
“We are not worried about the supply of gas at this stage. We are planning well. I’m not worried. The reason most probably [behind Shell pulling out] is going to be commercial because now the price of gas – LNG – has dropped more than 50%. Developing a more expensive solution is not going to be viable at this time but it’s also good news for us because we don’t want to develop gas that is more expensive than the gas we can import.”
Oil giant’s backing off is believed to have given UAE a flexible opportunity to surpass its commitment in gas producing by availingthe cheapest gas.
