Iran General NewsCrescent disputes changed Iran gas deal terms

Crescent disputes changed Iran gas deal terms

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ImageReuters: Iran said on Sunday Crescent Petroleum must agree to a new price and other terms for a gas export deal to go ahead, but the UAE firm said it had met all contractual obligations and called for judiciary intervention.

By Fredrik Dahl and Hashem Kalantari

ImageTEHRAN, Feb 15 (Reuters) – Iran said on Sunday Crescent Petroleum must agree to a new price and other terms for a gas export deal to go ahead, but the UAE firm said it had met all contractual obligations and called for judiciary intervention.

The two sides agreed in 2001 to deliver natural gas from Iran's offshore Salman field to meet rising energy demand in the United Arab Emirates. But prices have risen since then and talks have stalled over how much Crescent should pay for the gas.

Reza Kasaeizadeh, managing director of the National Iranian Gas Export Company, suggested Iran was also putting other conditions for finalising the agreement, including over how the gas would be sent to the UAE. He did not give details.

"In addition to that (the price) other conditions such as the manner of export, sale and delivery must also be taken into consideration," Kasaeizadeh said in remarks published on the web site of state broadcaster IRIB.

He reiterated a warning that Iran, which sits atop the world's second-largest gas reserves after Russia, could use the output from Salman at home in the absence of an agreement.

U.S. sanctions over Iran's disputed nuclear programme have slowed development of the country's gas exports, despite its huge reserves, analysts say. Iranian officials say it currently has little or no net exports of natural gas.

PRICING DISPUTE

Crescent's representative in Tehran said it had "fulfilled all its contractual obligations" and that Iran's national oil company NIOC was still not technically ready to deliver the gas, regardless of the price.

This had caused Crescent and its UAE customers "large and ongoing losses," Hamid Zaheri said in a faxed statement.

"We declare … that there is no basis whatsoever for excuses cited by the other side and call on the Iranian judiciary to judge the matter," Zaheri said.

The initial deal was for the supply of 600 million cubic feet per day. The UAE needs gas from the $1 billion project to meet rising growing demand from industry and power plants.

Crescent's affiliate, Dana Gas, would process and transport the gas from Salman to utilities and industrial users in the UAE.

Iranian officials have often warned that Tehran may abandon the deal if they are not satisfied with the terms. Kasaeizadeh said the gas could be used for domestic needs upon completion of the 270-km Siri-Assalouyeh pipeline.

"We cannot make a distinction between Crescent and other gas buyers and Crescent will have to accept the conditions … if it is interested in buying Iran's gas," he said.

Crescent's Zaheri said the price formula in the contract was linked to oil prices, which have fallen sharply in the last six months, and was the highest gas price in the region.

He also said the two sides had previously agreed on a new higher price proposed by Iranian officials but that NIOC was more than three years late in constructing its gas export facilities.

Experts have also said Iran had yet to complete building infrastructure to pump gas to the UAE, while Crescent's offshore pipeline and other facilities had been completed. (Editing by Editing by Hans Peters)

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