State-run Abu Dhabi National Oil Company (Adnoc) will proceed with a project to develop the Shah gas field despite ConocoPhillips' exit from the scheme, Adnoc said in a statement on Thursday.

Industry sources said on Wednesday Adnoc would continue with the project regardless of Conoco's decision, as the project is key to the United Arab Emirate's plans to boost gas output.

Contracts for facilities to pump and process the gas would be awarded 'in the near future', Adnoc said in the statement.

'(The) Shah Gas field development is a world-class project that will develop a key resource for the emirate of Abu Dhabi,' Adnoc said.

Third-largest US oil firm Conoco announced it had ended its participation in the $10 billion Shah project on Wednesday, its second withdrawal in a month from high-profile projects in the Gulf.

Conoco is restructuring operations to concentrate on oil and gas exploration and production and reduce its heavy debt burden.

The Shah scheme is to pump and purify gas with a high content of potentially deadly sulphur dioxide, making it tougher and more expensive to produce than conventional gas.

A large part of the around $10 billion investment would have gone into the gas processing facilities.

The UAE was looking for firms that may be able to replace Conoco, industry sources said on Wednesday. Conoco would have held a 40 per cent stake in the project.

The Gulf Arab state has been slow to develop the world's fifth-largest gas reserves to meet demand from industry and the power sector. To meet the shortfall, it imports gas via pipeline from Qatar.

Shah would pump around 1 billion cubic feet per day (cfd) of raw gas, which after processing would give 540 million cfd of gas fit for consumption.

Adnoc and Conoco had already commissioned work on the project. The two awarded a $300 million deal for site preparation in March. - Reuters