Iranian oil company cools on plans to pipe gas to UAE

The National Iranian Oil Company has said it wants to change the delivery point for its overdue natural gas supplies to Crescent Petroleum.

ABU DHABI // The National Iranian Oil Company (NIOC) has said it wants to change the delivery point for its overdue natural gas supplies to Crescent Petroleum, the Sharjah company that has been trying unsuccessfully to import Iranian gas to the UAE. In the latest twist in the dispute over gas deliveries that were supposed to start more than three years ago, a senior NIOC executive also repeated earlier claims that Crescent had not fulfilled unspecified contractual commitments, and again threatened that Iran would use the gas for domestic consumption.

"The price of the gas in the contract with Crescent Petroleum Company is not acceptable to the National Iranian Oil Company, and before finalising the contract, the parties should agree on a valid guarantee and a change in the place of the gas deliveries," Seifollah Jashnsaz told Shana, the Iranian oil ministry's official news agency, according to an e-mailed statement in Arabic and English. The statement did not give reasons for the requested change.

A Crescent spokesman reached yesterday said there were no outstanding contractual matters preventing NIOC from implementing the contract, which he said was more than 40 months late because of technical delays by the Iranian company. "We hope to soon receive a final date of expected readiness to deliver, so that this important strategic project can finally commence," he said. Crescent said this month that it would take the dispute to international arbitration.

Eight years ago, the privately held company signed a 25-year agreement with NIOC for supplies of 600 million cubic feet per day of gas, starting in 2005. But no gas has been delivered through Crescent's undersea pipeline, which was completed that year and has been sitting empty. Dana Gas, Crescent's affiliate and its partner in the project, has been unable to fulfil commitments to distribute the expected gas supplies to customers in the UAE.

While Crescent has complained about delays in the completion of Iranian production and export facilities for the promised gas, NIOC has sought to renegotiate the gas price, amid repeated threats by Iranian officials to cancel the deal. According to Shana, Mr Jashnsaz said the exports would start if they served Iranian national interests and if NIOC and Crescent agreed on new contract terms. "No arbitration source has been formed yet for investigation of the potential disagreements, and the case is under study," he said.

If the Crescent contract were not implemented, gas from the Salman field, off the Iranian coast, would instead be sent by pipeline to the Iranian port of Assaluyeh, Mr Jashnsaz said. Construction of that pipeline was progressing well, and the inauguration of production facilities for Salman gas would take place within a month, he added. Iran has the world's second-largest gas reserves, but has failed to develop sufficient production capacity to meet its domestic requirements.

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