The Adnoc Sour Gas joint venture, a partnership between Abu Dhabi National Oil Company (Adnoc) and Occidental (Oxy), has paused the expansion of the Shah gas terminal in Abu Dhabi. This decision halts an ongoing tender process to select an engineering, procurement, and construction (EPC) contractor, which had been active since 2024.

Reason for Pausing the Project

The joint venture decided not to progress with awarding the project contract due to "commercial considerations." Sources indicate that the commercial offers received from potential contractors were significantly higher than the venture's internal estimates. This is attributed to the project's nature as a sour gas development, which is typically more challenging and capital-intensive.

Status of the Tender and Future Prospects

While the current bid process is unlikely to move forward, there is potential for Adnoc and Oxy to further optimize the project in the future before re-offering it to EPC contractors. At least four contenders had submitted technical and commercial offers in the previous tender round.

Key Contractors Involved

The bidders for the expansion contract reportedly included Italy’s Tecnimont, UK's Petrofac, China Petroleum Engineering & Construction Corporation (CPECC), and a consortium of Italy’s Saipem and South Korea’s Samsung E&A. Adnoc and Petrofac declined to comment on the project, while other named contractors either did not respond or could not be reached for comment.

Project Background and Strategic Importance

The Shah gas terminal expansion is a key part of Abu Dhabi's strategy to significantly scale up gas production and position itself as a major gas exporter by the end of the decade. The tender aimed to increase the terminal's gas handling capacity to 1.85 billion cubic feet per day (Bcfd). This follows a previous $510 million EPC contract awarded to Saipem in 2021 for the Optimum Shah Gas Expansion, which increased capacity from 1.28 Bcfd to 1.45 Bcfd.

Joint Venture Structure and Facility Details

Adnoc holds a 60% stake in the Adnoc Sour Gas joint venture, with Oxy owning the remaining 40%. The Shah gas plant, located approximately 180 kilometres southwest of Abu Dhabi in the Liwa area, processes fluids from the nearby Shah Arab sour gas field.