Occidental Petroleum, the fourth-largest U.S. oil producer, won a $10 billion contract from Abu Dhabi to jointly develop the massive Shah gas field with Abu Dhabi National Oil Co. California-based Occidental will own 40% of the project and Adnoc will own the rest.
Occidental (OXY) beat larger rivals such as Exxon Mobil (XOM), the largest U.S. oil company, and Royal Dutch Shell (RDS-A), Europe's largest oil company, for the contract.
Abu Dhabi is home to seventh-largest gas reserves in the world. Fuel from Shah may cost more than $5 per million British thermal units to produce, more than five times the price Persian Gulf countries have traditionally paid for gas, Bloomberg News reported citing an industry analyst.
ConocoPhillips (COP), the third-largest U.S. oil company, was Adnoc's original foreign partner on the project, but withdrew last year as part of its plan to cut costs. Occidental also has gas ventures in Bahrain and the United Arab Emirates.