At the end of March the Abu Dhabi National Oil Company (ADNOC) and Occidental Petroleum of the US signed a US$10bn deal to develop jointly the Shah gasfield. According to the agreement, the two partners will hold 60% and 40% respectively in Al Hosn Gas, a company set up in 2010 to manage and operate the Shah project. Occidental replaced ConocoPhillips, another US firm, which withdrew as a strategic partner in the venture in April 2010.

High oil prices over most of the past decade have fuelled rapid economic growth in the UAE and encouraged dynamic development of the downstream hydrocarbons and manufacturing sectors. With gas demand projected to grow by 6-7% a year, from 7.5bn cu ft/day at present, the gas requirement of the country will double by 2020 according to government sources. Despite being an oil powerhouse, and sitting on the world's sixth-largest proven natural gas reserves, the UAE has been slow to develop its gas output, and in 2007 the federation became a net gas importer, mainly via a pipeline from Qatar.

Although the Shah field, discovered in 1966, plays a key role in the UAE's plans to meet rapidly rising domestic demand, its exploration has been characterised by a certain lack of momentum. Development of the Shah field has been problematic for several reasons. The site is located in the Empty Quarter, nearly 180 km south of Abu Dhabi, close to the border with Saudi Arabia, among some of the highest dunes in the world. The Shah's gas is buried thousands of metres below the desert and contains a high percentage of toxic hydrogen sulphide, which presents a challenge for treatment and handling. The presence of hydrogen sulphide poses specific technological and profitability problems, and the inaccessibility of the gas requires the building of costly infrastructure such as the world's longest pipeline for liquid sulphur and a new rail line to link the field with exporting facilities at Ruwais some 200 km away.

The withdrawal of ConocoPhillips a year ago was followed by an intense search for a new partner to take on the role. The search lasted nine months, during which time, ADNOC awarded eight out of ten contracts to develop the site and build infrastructure for exploration of gas. ADNOC maintains that the project is on track despite the change of the strategic partner and will be completed as planned in 2014.

It is projected that the Shah gasfield will produce around 1bn cu ft/day of sour gas (containing significant amounts of hydrogen sulphide), which would be processed to 500m cu ft of fuel and 10,000 tonnes of sulphur a day. With the additional sulphur output from the Shah field, the UAE is bound to become the world's biggest exporter of the mineral. The federation is well positioned to take over the markets for Canadian sulphur-Canada has for decades supplied sour gas from fields and sand deposits. The representatives of the Shah project are optimistic that, despite the persisting global sulphur glut, their product will find buyers, especially among major Asian fertiliser consumers.