Shell bows out of Kidan gas project in Saudi Arabia

Royal Dutch Shell PLC confirmed it will bow out of the Kidan natural gas development project in Saudi Arabia’s Empty Quarter.

Citing that it has been in “regular dialogue” with officials at the Ministry of Petroleum and Mineral Resources as well as Saudi Aramco—its joint venture partner in the South Rub Al Khali Co. Ltd. (SRAK) gas exploration project—Shell said it “has decided to end further investment in the Kidan development.”

In an e-mailed statement to OGJ, Shell added, “This was a difficult decision, but Shell remains committed to the Kingdom and we are keen to grow our investments, both in upstream and downstream.”

Shell and other partners were transferred a 30% share in SRAK in early 2008 when Total SA withdrew from the project after three dry wells were drilled (OGJ Online, Feb. 8, 2008).

In fall 2010, SRAK reported making what it called “promising” discoveries in the area, saying at the time it would start a second phase of exploration (OGJ Online, Jan. 6, 2011).

SRAK then extended its license by 5 years to 2015, and announced plans to drill three more exploration wells as well as to collect 3,600 km of 3D seismic data and 3,000 km of 2D data.

SRAK also agreed to draw up a development plan for sour gas reserves that have been discovered at Kidan, close to the southern border of the UAE, and a possible extension of the Shah sour gas field being developed by the Abu Dhabi National Oil Co.

Saudi Arabia’s search for gas has become a priority as it struggles to keep pace with rising demand. Both Eni SPA and Repsol-YPF SA have recently withdrawn from similar Saudi projects.

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