The International Court of Arbitration announced its verdict over the Iran-France gas row.
“French gas services company Sofregaz S.A. has been convicted of paying $42 million to Iran Gas Engineering and Development Company, a subsidiary of National Iranian Gas Company, for breaching its contract for the Varamin Yourtshai gas storage project,” IGEDC Managing Director Reza Noshadi was quoted as saying by the Oil Ministry’s news service.
The dispute dates back to 2014 when the French company signed a contract with IGEDC for the conversion of a gas field located in Varamin, south of Tehran, into underground storage. Nonetheless, the French firm terminated the contract due to international sanctions against Iran, after which its $16 million letter of guarantee was confiscated and credited to the Iranian company.
The IGEDC via the Presidential Office provided the court with damning evidence on the Sofregaz’s contract for the project, which ultimately resulted in the company’s conviction.
“The French company Sofregaz has been found guilty,” he said.
The complaint pertained to Sofregaz’s unilateral withdrawal from the project and its failure to comply with contractual obligations.
A separate claim has been submitted to the court, seeking compensation for damages, he added.
Sofregaz brought arbitration proceedings against IGEDC under the ICC Rules of Arbitration, seated in Paris. In 2018, the tribunal ruled in favor of the Iranian firm.
In 2019, Sofregaz filed an application to set aside the award before the International Chamber of the Paris Court of Appeal that was rejected.
Sofregaz had been working on the Varamin Yourtshai project with the Iranian company since 2001. Their remit was to convert an aquifer in central Iran into an underground gas storage facility, in the proximity of main gas transport lines.
The $540 million project located in Varamin has the capacity to store 270-540 million cubic meters of natural gas.
