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Adnoc and Oxy shelve Shah gas plant expansion project

16 January 2026

Abu Dhabi National Oil Company (Adnoc) and its partner, US energy company Occidental Petroleum (Oxy), have shelved the engineering, procurement and construction (EPC) tendering process for a major project to expand the Shah gas processing plant in Abu Dhabi.

The Shah gas plant is operated by Adnoc Group subsidiary, Adnoc Sour Gas – a 60:40 joint venture of Adnoc and Oxy. The project aimed to increase the Shah gas plant’s sour gas processing capacity from 1.28 billion cubic feet a day (cf/d) to 1.85 billion cf/d.

Adnoc and Oxy decided to put the EPC tendering exercise for the Shah gas plant expansion project on hold owing to commercial proposals submitted by bidders exceeding their budget, according to sources.

“High EPC prices submitted by the bidders are thought to be the main reason why the project has been put on hold,” one source said.

Another source said: “Along with the price issue stalling the project, there could be other factors at play, such as the partners not being aligned, cost economics and offtake agreements.”

Adnoc Sour Gas is understood to have issued the main EPC tender for the Shah gas plant expansion project in December 2024. MEED reported that contractors submitted technical bids for the project by 13 May and commercial bids by 31 July last year.

Adnoc had been in negotiations with bidders for months following the submission of proposals for the Shah gas plant expansion project. Based upon initial evaluation of bids, China Petroleum Engineering & Construction Company (CPECC) had emerged as the lowest bidder, MEED reported in early October.

Adnoc, however, remained in talks with the other bidders, and in the weeks since, Italian contractor Tecnimont emerged as a “strong contender” for the project contract, as per sources.

Contractors that submitted bids for the Shah gas plant expansion project are understood to include:

  • China Petroleum Engineering & Construction Company
  • Petrofac (UK)
  • Saipem (Italy) / Samsung E&A (South Korea)
  • Tecnimont (Italy)

UK-headquartered Wood Group has performed front-end engineering and design works on the project, having won a contract in January 2024.

Adnoc and Oxy initially planned to execute the project using a feed-to-EPC model. This process requires the operator to shortlist contractors for the project’s front-end engineering and design (feed) work, with the firm that submits the best feed proposal being awarded the contract for the EPC works.

Contractors expressed interest in participating in the feed-to-EPC competition for the Shah gas plant scheme in September 2023.

Adnoc Sour Gas later cancelled the feed-to-EPC model and opted for a conventional project execution approach, according to sources.

A fresh feed tender for the project was issued “during the last quarter” of 2023, sources said at the time.

Shah gas plant expansion

The Shah gas plant, located 210 kilometres southwest of the city of Abu Dhabi, came online in 2015 with a processing capacity of 1.28 billion cf/d.

The facility draws associated gas produced from the onshore Shah oil field, which has an output capacity of 70,000 barrels a day. In January, Adnoc announced that the Shah field had achieved a carbon intensity of 0.1 kilogrammes of carbon dioxide (CO2) equivalent per barrel of oil equivalent.

The field reached this milestone through optimised field development and the deployment of digitalisation, artificial intelligence (AI) and other technologies to maximise efficiencies and minimise emissions. The field also benefits from Adnoc’s electrification of its onshore assets, which are powered by nuclear and solar energy sources.

To increase the Shah gas plant’s output to a potential 1.45 billion cf/d, Adnoc Sour Gas undertook the Optimum Shah Gas Expansion (OGSE) project in 2021. Italian contractor Saipem was awarded a $510m contract in June of that year to execute EPC works on the project. The OGSE project is now in the commissioning stage.

Adnoc Sour Gas expects to raise the asset’s production potential to 1.85 billion cf/d through the Shah gas plant expansion project.

Shah gas plant CO2 recovery

Last year, Adnoc Sour Gas undertook a project to capture and transport CO2 emissions from the facility’s operations.

The project aimed to recover, dehydrate, compress and transport CO2 from the Shah gas plant’s operations to the Bab onshore oil field for enhanced oil recovery (EOR).

However, Adnoc Sour Gas suspended the Shah gas plant CO2 recovery project, with sources expecting it could be revived this year.

The Shah gas plant CO2 recovery project is expected to deliver up to 1.37 billion cf/d of CO2 with a 95.5 mole percentage. The CO2 recovery facilities are to be designed for a target availability of 95%, with less than 400 parts per million by volume hydrogen sulphide and less than 20 pounds of water per million cubic feet a day.

The recovered CO2 will be supplied through an approximately 125-kilometre pipeline to the Bab field for re-injection into the wells at 210-barg pressure for EOR purposes.

Adnoc Sour Gas has stipulated the use of Shell’s Cansolv CO2 capture licensed technology by the EPC contractor for the project.

Adnoc Sour Gas production

Adnoc Sour Gas, in which Adnoc Group holds the majority 60% stake and US energy company Occidental Petroleum (Oxy) holds the other 40%, currently produces 1.28 billion cf/d of gas and 4.2 million tonnes a year of sulphur from the Shah onshore sour gas field.

The Shah gas production complex in Abu Dhabi is understood to be the world’s largest ultra-sour gas facility. It includes gas processing units and a sulphur granulation plant that features four of the largest sulphur recovery units in the world.

Adnoc Sour Gas processes more than 1 billion cf/d of ultra-sour gas, with a hydrogen sulphide content of more than 23%, from a single, integrated field-gas plant development. The company accounts for about 5% of global production.

About 17,000 tonnes of granulated sulphur produced by Adnoc Sour Gas from the Shah and Habshan fields are transported by Etihad Rail to Adnoc’s Ruwais terminal every day. From there, it is exported to markets worldwide for use in fertiliser manufacturing.

Adnoc Sour Gas also produces condensates, ethane and natural gas liquids. All products, except sulphur, are delivered to Adnoc Group companies for further processing or distribution to domestic consumers.

ALSO READ: Adnoc awards Sarb offshore gas development contract
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Indrajit Sen

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