The Abu Dhabi National Oil Company (Adnoc) and ConocoPhillips signed a deal on Thursday for a multi-billion dollar project to develop the Shah gas field in the UAE.

The UAE holds the world's fifth-largest gas reserves but has failed to keep up with rising domestic demand from a petrodollar-fuelled economy. The Shah gas project, with an estimated cost of around $10 billion, is part of plans to boost domestic gas supply.

Growth in the world's third-largest oil exporter has slowed with the global downturn, but the Gulf Arab state remains dependent on gas imports from Qatar to fire power stations and meet the needs of industry.

The Shah joint venture would process around 1 billion cubic feet per day (cfd) of sour gas from the Shah field to pump around 540 million cfd of gas suitable for consumption, Adnoc said in a statement.

Adnoc awarded Conoco the contract last February, but negotiations on the final deal have taken over a year to conclude.

Completion of the project, last slated for late 2014 or early 2015, is already two to three years behind the initial schedule.

Energy projects throughout the world's top oil exporting region have been delayed as state oil companies and their partners look to cash in on falling costs for materials, labour and industry services.

A source working on the project said last week that cost estimates were falling, and the joint venture hoped to see something similar to the $2 billion saving on the cost of a new refinery in Saudi Arabia last month.

The gas at Shah has a content of around 30 percent of deadly sulphur dioxide, making it tougher to produce than conventional gas reserves.

The project would involve the construction of several gas gathering systems plus a gas processing train, gas and liquid pipelines and a sulfur exporting facility at the city of Ruwais, Adnoc said in the statement.

Adnoc said in May it had issued tenders for four large contracts for the development, which it aims to award in 2010. It said then it planned to issue two more. The partners have broken down the joint venture into 10 construction packages.

Adnoc will own 60 percent of the joint venture, while Conoco would own the rest. The two would share the cost of the venture, Adnoc said in the statement, but did not detail who would bear what portion of the costs. - Reuters