The United Arab Emirates will sign a contract to develop its sour gas reserves within a week, an official at state oil company Adnoc said on Tuesday.

Adnoc sources told Reuters in February that US oil giant ConocoPhillips had won the project to develop sour gas at the Shah field, which has a price tag of over $10 billion. Conoco and Adnoc have yet to make an official announcement on the contract.

The project was the largest upstream project in the past year open to international companies competing for limited access to the Middle East's oil and gas fields.

'We expect to sign within a week' Omair Suwaina, manager of the onshore division of Adnoc's exploration and production directorate, told reporters on the sidelines of an energy conference. 'The project is going as planned, there are no delays or issues.'    

Suwaina declined to confirm the winner of the contract nor the estimated cost of the project. Rising costs worldwide in the energy industry had pushed up the investment needed in sour gas development, he said in a presentation to the conference.

Last year, analysts pegged the price of developing both Shah and a second sour gas field called Bab at $10 billion. Now, the cost is as high just for the one field.

He said the UAE, short of gas to fuel rapid economic development, would go ahead with plans to develop other sour gas fields.

'There will be more developments. It is necessary and we have to do it,' he said. Still, the rising price of sulphur, a by-product of cleaning up the gas, would help make the projects profitable, he added.

Sulphur prices stood at around $700-$800 a tonne, Suwaina said. The UAE holds the world's fifth-largest gas reserves at nearly 214 trillion cubic feet, much of it sour.

Sour gas has a high content of potentially deadly hydrogen sulphide, making it tougher to produce than conventional gas reserves. - Reuters