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 bids, including Tecnimont, Petrofac, China Petroleum Engineering & Construction Corporation (CPECC), and a consortium of Saipem and Samsung E&A.

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 expansion aimed to increase the terminal's gas handling capacity to 1.85 billion cubic feet per day. The plant, located southwest of Abu Dhabi, processes fluids from the Shah Arab sour gas field.

Previous Project Activity and Ownership

In 2021, Saipem was awarded a $510 million EPC contract for the Optimum Shah Gas Expansion project, which was designed to increase capacity from 1.28 to 1.45 billion cubic feet per day. Adnoc Sour Gas is owned 60% by Adnoc and 40% by Oxy.