The United Arab Emirates' state rail company is in talks to move 7 million tonnes of granulated sulphur from its planned $10 billion sour gas facility in Shah/Habshan to Ruwais on the Gulf, the rail company's chairman said on Monday.

Union Railways, which is building a $8.2 billion nationwide rail network, is in advanced talks with state-run Abu Dhabi National Oil Company (Adnoc) for the contract, which would see the sulphur transported by 2013-14 once the gas project is developed.

'We are in the advanced stage of discussions with Adnoc for the movement of seven million tonnes of granulated sulphur,' Hussain al-Nowais said at a Middle East Economic Digest rail conference in Abu Dhabi.

The Shah gas development project is the first in the UAE of a sour gas field. The Opec oil exporter has the world's fifth-largest gas reserves, much of it sour or with a high sulphur content.

The project is run by a joint venture of Adnoc and US oil company ConocoPhillips.

Adnoc had initially planned to move the sulphur via a pipeline, but despite the region's arid environment appears to be opting for the more costly alternative.

'This (rail link) is a very special project ... the first time such quantities of sulphur are being transported,' he added, declining to say how much the line would cost.

The rail link from the Shah gas field to Ruwais will run 264 kilometres and would be in addition to a 1,100-kilometre nationwide freight and passenger network, he said.

Adnoc holds a 60 per cent stake in Shah, while Conoco holds the remainder. The project, which will be implemented in three phases will process about 1 billion cubic feet a day of sour gas from 20 wells.

Nowais declined to say how the sulphur would be used. 'It is a decision for Adnoc,' he said. 'India and China are big consumers of sulphur. I am sure there will be usage.'    
Sulphur is then used for the manufacture of end products such as fertilizers, plastics and pharmaceuticals.-Reuters