Cheaper natural gas is the challenge for Abu Dhabi

Abu Dhabi needs to find cheaper ways to develop its gas resources as it embarks on its first sour gas project, says an official from the emirate's national oil company.

Abu Dhabi and other Middle East producers need to find cheaper ways to develop natural gas as they explore more challenging reserves, says a top official at the Government's national oil company.

The emirate is starting its first sour gas project after ending a nine-month search for an international partner at its Shah fields, which are known for their high quantities of toxic sulphur.

"For projects to continue to be developed economically there needs to be further cost reduction, especially as we develop fields with tighter returns on investment," said Dr Saif al Nasseri, who manages planning and gas processing at Abu Dhabi National Oil Company's (Adnoc) exploration and production directorate.

Adnoc last month awarded a contract to develop the Shah gasfields in the emirate's south-western region to Occidental Petroleum of the US. The concession had been open since April, when another US company, ConocoPhillips, abandoned the US$10 billion (Dh36.72bn) project.

Adnoc has already selected contractors to build the infrastructure to deal with the sulphur that will be separated from the gas, including a railway to transport solidified sulphur and export facilities at the port of Ruwais.

Even as the region's gas industry finds ways to cut development costs, it needs to keep up investment in long-term projects and train staff, Dr al Nasseri said.

The Adnoc executive, who was addressing an audience of international gas specialists at an Abu Dhabi conference, acknowledged the difficulty of balancing Abu Dhabi's desire to fuel economic development with its environmental goals.

Gas will be "the bridge to a lower -carbon future of which we are desperately in need", Dr al Nasseri said. "Natural gas has come of age." Fatih Birol, the chief economist of the International Energy Agency, has said the world is entering a "golden age of gas".