* Shell says project uneconomic in current downturn
* Major writedowns not expected (Adds details throughout, updates shares)
By Ron Bousso
LONDON, Jan 18 (Reuters) - Royal Dutch Shell saidon Monday it had decided to exit a multi-billion-dollar plan todevelop jointly the Bab sour gas field in Abu Dhabi, the latestmajor project to fall victim to the worst oil-market downturn indecades.
The Anglo-Dutch company said that "following a careful andthorough evaluation of technical challenges and costs" it wouldstop further joint work on the project with Abu Dhabi NationalOil Co (ADNOC).
Shell won in 2013 a tender valued at the time at $10 billionfor a 40 percent stake in a 30-year venture to develop thecomplex sour gas field, involving the treatment of potentiallydeadly gasses.
The Bab joint venture envisaged building a sour gasprocessing plant that would yield 1 billion cubic feet per day,aimed at domestic consumption.
The move was also seen at the time as a stepping stone forShell to renew a coveted concession to develop the United ArabEmirates' largest onshore oilfield.
"The evaluation concluded that for Shell, the development ofthe project does not fit with the company's strategy,particularly in the economic climate prevailing in the energyindustry," Shell said in a statement on Monday.
The decision is not expected to result in a significantwritedown for Shell, which reports interim fourth-quarter andfull-year 2015 results on Wednesday ahead of a key shareholdervote on its proposed acquisition of BG Group.
Shell shares were down 0.5 percent at 1445 GMT, comparedwith a 0.2 percent gain for the sector index.
The United Arab Emirates' energy minister said the UAE wasnot worried about Shell's pullout.
"The reason most probably will be (a) commercial reasonbecause now the cost of gas and the price of gas and LNG hasdropped more than 50 percent," Suhail bin Mohammed al-Mazrouisaid on the sidelines of a conference in Abu Dhabi.
"We are not worried about supply of gas. We are planningwell. If the company is pulling out, I'm not worried," Mazrouisaid.
Analysts at Bernstein welcomed Shell's decision to exit "yetanother high-cost (and) low-return project" even at the cost ofrisking long-term relationships with countries.
"Such actions are increasingly placing Shell further downthe cost curve while making it even stronger at the cyclebottom," they wrote. Bernstein rates Shell as "outperform".
Shell pulled out of several major projects last year as aresult of the steep decline in oil prices since June 2014,including its 80,000-barrels-per-day Carmon Creek thermal oilsands project and the 200,000 bpd Pierre River oil sands miningproject in Canada.
(Additional reporting by Rania El Gamel in Dubai; Editing byDale Hudson)