ABU DHABI,(Reuters) – ConocoPhillips has pulled out of a $10 billion project to develop the Shah sour gas field in the United Arab Emirates, industry sources said on Wednesday.
The third-largest U.S. oil company has now backed out of two high profile, high price projects with state oil companies in the world’s top oil exporting region in a month after a strategy change to focus on oil and gas exploration and production.
“Conoco has pulled out,” one source familiar with the negotiations for the gas project said. “The project has only a small exploration and production component, so that’s a bit conflicting with the company strategy.”
Conoco has announced plans to reduce refining operations to focus on oil and gas exploration and production. The firm also plans to sell $10 billion in assets to reduce its heavy debt burden.
The Shah project was a joint venture with state oil firm the Abu Dhabi National Oil Co. (ADNOC). An ADNOC spokesman was unable to give an immediate comment on Conoco’s withdrawal, or on how ADNOC would proceed with the project.
Shah is a key part of the UAE’s strategy to boost gas production to meet rapidly rising gas demand.
The project has already been delayed by at least three years and was slated to start-up by the second or third quarter of 2014.
Earlier this month, Conoco withdrew from a project worth as much as $12 billion to build a 400,000 barrels per day refinery at Yanbu in Saudi Arabia.